It's Time to Get Rid of LIFO Conformity

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Now that we're in the 21st Century, shouldn't we be uncomfortable with a significant tax provision that originated before World War II? You might think so, but the last-in, first-out (LIFO) conformity rule has been at work for so long that almost no one even notices it. We certainly have noticed, and we find that the conformity rule forces managers to shortchange stockholders in either the financial statements or the tax return. Without it, financial reporting would provide more useful information, and the economy would be more productive and prosperous.

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