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Calculating Section 263A Capitalized Inventory Costs

Allocation Methods; Direct, Indirect, and Mixed Service Costs; Calculating Absorption Ratios; Recent Legislation

A live 110-minute CPE webinar with interactive Q&A

This program is included with the Strafford CPE Pass. Click for more information.
This program is included with the Strafford CPE+ Pass. Click for more information.
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Monday, January 27, 2025

1:00pm-2:50pm EST, 10:00am-11:50am PST

Early Registration Discount Deadline, Friday, January 3, 2025

or call 1-800-926-7926
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This webinar will explore the latest rules surrounding IRC Section 263A capitalization and inclusion requirements for certain expenses in inventory. Our panel of inventory accounting method experts will define UNICAP costs and compare allocation methods for assigning these costs using examples and frequently encountered scenarios.

Description

IRC Section 263A requires taxpayers who produce inventory to allocate certain expenses to the items produced. These amounts are expensed or capitalized based on these allocations, which can significantly impact taxable income or loss. Applicable taxpayers who are producers or resellers must identify Section 471 costs, including direct and indirect costs. Direct labor and material costs, indirect costs such as purchasing and handling, and mixed service costs must be allocated. Mixed service costs could include personnel salaries, selling, and marketing costs as well as accounting and depreciation expenses.

A taxpayer can use several methods to calculate and distribute these attached costs. These include the specific identification method, burden rate method, standard cost method, and any other reasonable method to allocate additional Section 263A costs (Treas. Reg. 1.263A-1(f)). TCJA included legislation outlining the treatment of negative adjustments, interest expense, requirements for the simplified method of accounting, and other matters relative to 263A calculations. Tax practitioners working with businesses producing inventory must understand the latest guidelines and how to comply expeditiously.

Listen as our panel of federal tax specialists breaks down the complexities of 263A and offers advice to aid in these complex calculations.

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Outline

  1. Section 263A Uniform Capitalization of Costs: introduction
  2. Applicable businesses
  3. Exceptions and exemptions
  4. Allocation methods
  5. Section 471 costs
  6. Recent legislation

A. TCJA provisions

B. New proposed regulations for interest capitalization

C. Other legislation

7. Computations and examples

Benefits

The panel will discuss these and other critical issues:

  • Exceptions from 263A capitalization requirements
  • Treatment of negative adjustments under 263A
  • Examples and scenarios of allocating direct, indirect, and mixed service costs
  • Accepted allocation methods
  • Advice for facilitating the required computations under 263A

Faculty

Strong, David
David Strong, CPA
Partner
Crowe

Mr. Strong is a leader in the delivery of tax accounting services related to inventory valuation, accounting method...  |  Read More

Additional faculty
to be announced.
Attend on January 27

Early Discount (through 01/03/25)

CPE credit processing is available for an additional fee of $39.
CPE processing must be ordered prior to the event. See NASBA details.

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Early Discount (through 01/03/25)

CPE credit is not available on downloads.

CPE On-Demand

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