In 2016, Gail changed from the lower of cost or market FIFO method to the LIFO inventory method The ending inventory for 2015 was computed as follows:

Item FIFO Cost Replacement Cost Lower of Cost or Market

A $26,000 $15,000 $15,000

B 52,000 55,000 52,000

C 30,000 7,000 7,000

$74,000

Item C was damaged goods, and the replacement cost used was actually the estimated selling price of the goods. The actual cost to replace item C was $32,000.

a. What is the correct beginning inventory for 2016 under the LIFO method?

b. What immediate tax consequences (if any) will result from the switch to LIFO?