Lifo Recapture

Lifo Recapture means:
recapture of the excess of first in, first out (FIFO) inventory over the LIFO inventory on a C corporation's last day before an S corporation election becomes effective. One-fourth of the additional tax caused by this LIFO recapture is paid by the due date of the last C corporate return and one-fourth with each of the first three S corporate returns. The purpose of this recapture tax is to prevent a LIFO C corporation from avoiding the penalty tax by simply not invading the LIFO layers. IRC (check if this IRC provision is current here) § 1374(d).