LIFO Liquidation

[Poch213]

Hi Guys,
Just a quick question on liquidation. I read that the liquidation (over a period of rising prices) will cause taxes to rise as you pay more tax on the higher gross profit earned. However I thought that items are taxed based on their balance sheet value and future economic benefit– or is this only for long lived asset with depreciation?
Thanks

 

[S2000magician]

Profits are taxed based on revenues less costs.
If costs are lower (as in a LIFO liquidation), profits are higher, so taxes are higher.