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AICPA Exam CPA-Regulation Topic 1 Question 53 Discussion
Topic #: 1
The uniform capitalization method must be used by:
I Manufacturers of tangible personal property.
II Retailers of personal property with $2 million dollars in average annual gross receipts for the 3 preceding years.
Choice 'a' is correct. I only.
Rule: The uniform capitalization rules apply to the following:
1. Real or tangible personal property produced by the taxpayer for use in a trade or business.
2. Real or tangible personal property produced by the taxpayer for sale to customers.
3. Real or personal property acquired by the taxpayer for resale.
4. However, the uniform capitalization rules do not apply to property acquired for resale if the taxpayer's annual gross receipts for the preceding three tax years do not exceed $10,000,000 (not $2 million).
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