I have a small Sub-S retailer for whom I did a (very) short-year return in 06. For 07, we're properly extended, but 2 questions arise after looking at the situation and doing some reading about it.
- At the end of 06 it was our understanding that no inventory would be involved. I set up as a cash-basis firm. I realized later that it has plenty of inventory (though relatively very little at the end of
- Capitalization of Costs (263A) They had substantially more inventory in 07, but far less than mil in total sales. Am I reading it correctly that under mil a year (assuming 3 years) they will not have to capitalize costs yet? Reg. Section 1.263A-3(b)(1)(ii)