UNICAP is short for Uniform Capitalization. That probably doesn’t even help explain it. The IRS Code Section 263A is all about the Uniform Capitalization rules. In general UNICAP is the amount of costs that a company needs to capitalize related to their inventory. As you might suspect, that means it only applies to companies with inventory. Any company that produces real or tangible personal property or acquires it for resale might need to apply the UNICAP rules and have a UNICAP adjustment. As with any Code Section there are exceptions to the UNICAP rules. The biggest exception is that companies with average gross receipts of $25M or less over the past three years are exempt. That means a little company with small sales and small inventory numbers doesn’t need to bother making a UNICAP adjustment, which would just be tiny anyway. The UNICAP only applies to those companies with over $25M in gross receipts. The UNICAP adjustment takes a method of determining how m...