Question

Under the uniform capitalization rules applicable to taxpayers with property acquired for resale, which of the following costs should be capitalized with respect to inventory if no exceptions have been met? Repackaging costsOff-site storage costsa. Yes Yes b. Yes No c. No Yes d. No No

Answer 1

The correct answer is A

Step-by-step explanation:

As per the UNICAP (stands for Uniform Capitalization) rules, the person have to capitalize the cost for creating the assets, which means or defines as to capitalize the raw materials, labor cost and other indirect as well as direct costs that is attributable to the production of the assets.

So, the costs which is to be capitalized in respect to inventory are the repacking cost, which is involved in the indirect supplies and other materials and the off site storage cost is involves in the rental of the facilities and equipment.