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1065 returns

UNICAP Summary

This template summarizes the UNICAP timing difference between book and income tax.  A reconciliation of Cost of Goods Sold is provided for both book and tax purposes.  The uniform capitalization (UNICAP) rules of IRC Sec. 263A require businesses to capitalize (or treat as inventory costs) certain indirect costs that they previously deducted as period expenses.  These costs are then deducted as the related inventory is sold.  The practical effect is the deferral of a tax deduction for these expenses until the inventory is sold (usually in the following year), creating a timing difference between book and tax income.

Entering Information

All of the information needed to produce the calculations is entered on the Input worksheet. The yellow highlighted cells are calculated fields, and no data should be entered in these cells.  Gray cells are not calculated fields, but data should not be entered in these cells.
Enter the following information:
Amounts per books:
  • Beginning inventory
  • Purchases
  • Cost of labor
  • Other costs included in cost of goods sold (CGS).  Enter the description and the amount of other costs to be included in CGS.
  • Ending inventory
Section 263A costs:
  • Included in beginning inventory
  • Included in ending inventory
  • Additional Section 263A costs per books. Enter costs (other than interest) not capitalized or included in inventory by the business under its pre-UNICAP method of accounting but required to be capitalized under UNICAP.  New businesses enter costs that would have to have been capitalized had the business been in existence prior to the UNICAP rules.