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PICK IPIC

Are monthly or quarterly LIFO calculations burdensome or inaccurate? Do you spend a lot of time and effort generating your own inflation indexes? Are you concerned about the integrity of your current LIFO method? If you answered "yes" to any of these questions, SourceCorp has the solution – the IPIC (Inventory Price Index Computation) LIFO method. Here's how it can benefit your business:

Time Savings.
The IPIC method utilizes Consumer Price Indexes (CPI) or Producer Price Indexes (PPI). By using published inflation data, the IPIC method saves substantial time and resources in LIFO computations. Quarterly estimates and annual computations are quick, easy and accurate.

Increased Tax Benefits.
In many cases, the IPIC method will yield higher tax benefits than other LIFO methods.

Many companies with extraordinary buying power believe their internally generated inflation factors are lower than published indexes. Fewer LIFO pools may be required under the IPIC method. Generally, the fewer the number of pools, the better the LIFO tax benefit.
If you're a manufacturer or you're a retailer on the retail accounting method, cost complements or gross profit margins must be accounted for in the LIFO computation. Inflation factors increase as your margins decrease, thereby increasing your tax benefits.

Protection from Audit.
Perhaps one of the most important tax benefits of the IPIC method is its audit protection. If your business currently employs a questionable LIFO method, you can protect most, if not all, of your existing LIFO benefits from the IRS audit by filing a form 3115 to change to the IPIC method! (Rev. Proc. 2002-9)

Are there any drawbacks to the IPIC method?
The IPIC method may not be the best choice for every business. But many businesses have found that the advantages of the method greatly outweigh the disadvantages.

If you're a manufacturer or you're a retailer on the retail accounting method, inflation indexes increase as your margins decrease; however, the opposite is true when margins increase.
Your existing inventory categories must be matched with the appropriate CPI or PPI categories published by the Bureau of Labor Statistics.

Pick IPIC. Pick SourceCorp.
As the nation's largest firm specializing in LIFO accounting, SourceCorp has helped businesses of all sizes discover the tremendous advantages of the IPIC method. To find if the IPIC method is a viable alternative for your business, give us a call at 1-817-732-5494. To pick the IPIC method, pick up the phone and call us today!