In a period of falling prices which inventory method would a company use to minimize tax liability?

Answer 1

FIFO - the older inventory would have had a higher cost if prices are falling.

Answer 2

Mathwise, it is FIFO.

However, a company cannot switch back and forth between FIFO and LIFO each year. The IRS will make an entity waity five years before allowing another LIFO election.

Answer 3

total liquidation/ bankruptcy & movement out of the taxible region of service this is one of the reasons why so many companies are going to the middle asian areas, no taxes at all