If your business uses the LIFO method for inventory, there’s a small but important change to Form 1125-A this year. In the past, you only had to report your closing LIFO inventory on line 9d. Starting with the 2024 version of the form, line 9d has been split into two parts. Line 9d(i) still asks for your closing inventory under LIFO, but now there’s a brand-new line 9d(ii) where you’ll need to report your LIFO reserve.
The LIFO reserve is simply the difference between what your inventory would be worth under FIFO compared to LIFO. This change doesn’t affect how you calculate LIFO; it simply makes you show both numbers on the form going forward. In short, the IRS is asking for a little more transparency so that the IRS can clearly see the impact of using LIFO. For most businesses, it just means one extra figure to report each year.
Here is the comparison of the changes on Form 1125-A:
Here is the comparison of the IRS instructions on Form 1125-A
Although it’s a minor change, it’s critical to always stay up to date with LIFO related changes. The team at LIFOPro is knowledgeable and can handle preparing all IRS forms related to LIFO + ensure you stay in the know! We make everything about onboarding and being on LIFO as seamless as possible. Between tariffs and inflation, right now is a great time to elect LIFO to offset the economic uncertainty. All of our work has guaranteed calculation accuracy, is backed by our annual SOC report and does include IRS support should you need it. Reach out today for your complimentary LIFO analysis or review!