Can an entity switch from capitalizing allowable costs for COGS to expensing allowable costs for COGS?
The election to capitalize or expense allowable costs for COGS is an annual election. If a taxable entity capitalizes allowable costs for COGS and later elects to begin expensing those allowable costs, the entity may not deduct any costs incurred before the first day of the report period upon which the tax is based, including any ending inventory from a previous report.
