There continue to be rumblings that Congress may repeal the LIFO accounting method for inventory.
If that happens, companies using the last-in-first-out method may have to pay back LIFO savings accrued over many years. And while many think that LIFO is a “loophole” used mainly by the large oil companies, in fact it is a legitimate inventory accounting method in use in the U.S. since the 1930s.
Roughly 40 to 50 percent of businesses in nearly every industry that use inventories use LIFO, according to Christian Klein, vice president of public affairs for Associated Equipment Distributors. This includes auto dealers, distilled spirits distributors, big retail outlets, as well as pharmaceutical and medical supplies businesses.
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