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LIFO reserve adjestment for asset

Asset+LIFO reserve

Asset+LIFO reserve (1-Tax rate)

When should we use which one?

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I believe it depends on the line item you are adjusting. If the particular line item being modified to FIFO was retained earnings, you would use the (1–TR) because those lines items take place after taxes. If the line items are before tax (i.e., Inventory) then you would use w/o the tax rate. Adjusting income statement items follow the same logic as well, except instead of using the current LIFO reserve, you have to take the change in the LIFO reserve.

Edited for some clarification

It’s scary to think how quickly I’ve forgotten all this stuff. And the hindsight bias that level 1 was actually a lot harder than you think when you pass it.