(a) The LIFO inventory method may be adopted and used only if the taxpayer files with his income tax return for the taxable year as of the close of which the method is first to be used a statement of his election to use such inventory method. The statement shall be made on Form 970 pursuant to the instructions printed with respect thereto and to the requirements of this section, or in such other manner as may be acceptable to the Commissioner. Such statement shall be accompanied by an analysis of all inventories of the taxpayer as of the beginning and as of the end of the taxable year for which the LIFO inventory method is proposed first to be used, and also as of the beginning of the prior taxable year. In the case of a manufacturer, this analysis shall show in detail the manner in which costs are computed with respect to raw materials, goods in process, and finished goods, segregating the products (whether in process or finished goods) into natural groups on the basis of either (1) similarity in factory processes through which they pass, or (2) similarity of raw materials used, or (3) similarity in style, shape, or use of finished products. Each group of products shall be clearly described.
(b) The taxpayer shall submit for the consideration of the Commissioner in connection with the taxpayer's adoption or use of the LIFO inventory method such other detailed information with respect to his business or accounting system as may be at any time requested by the Commissioner.
(c) As a condition to the taxpayer's use of the LIFO inventory method, the Commissioner may require that the method be used with respect to goods other than those specified in the taxpayer's statement of election if, in the opinion of the Commissioner, the use of such method with respect to such other goods is essential to a clear reflection of income.
(d) Whether or not the taxpayer's application for the adoption and use of the LIFO inventory method should be approved, and whether or not such method, once adopted, may be continued, and the propriety of all computations incidental to the use of such method, will be determined by the Commissioner in connection with the examination of the taxpayer's income tax returns.
[T.D. 6500, 25 FR 11729, Nov. 26, 1960, as amended by T.D. 7295, 38 FR 34203, Dec. 12, 1973]
Notes of Decisions
Consol. Mfg. v. Comm'r, 111 T.C. 1 (Tax Ct. 1998).
· cites it 14× “*114 In support of its position, petitioner cites, inter alia, Rev. Proc. 79-23 , 1979- 1 C.B. 564 , and section 1.”
Fischer Indus., Inc. v. Comm'r, 87 T.C. 116 (Tax Ct. 1986).
· cites it 6× “The statement shall be made on Form 970 pursuant to the instructions printed with respect thereto and to the requirements of this section, or in such other manner as may be acceptable to the Commissioner.”
The Credit Life Ins. Co. v. The United States, 948 F.2d 723 (Fed. Cir. 1992).
“The regulation in Fischer is not comparable to the regulation in this appeal because the Fischer regulation contemplates that a statement of election “be made on form 970 pursuant to the instructions printed with respect thereto and to the requirements of this section, or in…”
Boecking v. Comm'r, 66 T.C.M. 1148 (Tax Ct. 1993).
· cites it 6× “An index may be computed by double-extending a representative portion of the inventory in a pool or by the use of other sound and consistent statistical methods.”
South Side Control Supply Co. v. Comm'r, 44 T.C.M. 1383 (Tax Ct. 1982).
· cites it 2× “South Side computed its taxable income for 1974 using LIFO, as the advance consent of the Commissioner is *165 not needed in order to adopt the LIFO method.”
Martin's, Inc. of Moberly v. Comm'r, 54 T.C.M. 247 (Tax Ct. 1987).
· cites it 2× “The statement shall be made on Form 970 pursuant to the instructions printed with respect thereto and to the requirements of this section, or in such other manner as may be acceptable to the Commissioner.”
Oak Knoll Cellar v. Comm'r, 68 T.C.M. 412 (Tax Ct. 1994).
· cites it 10× “, the Commissioner has discretion to examine a taxpayer's tax returns and books and records pertaining to the taxpayer's LIFO method in order to determine whether the taxpayer will be permitted to continue to use the LIFO method elected.”
William Powell Co. v. United States, 524 F. Supp. 841 (S.D. Ohio 1981).
“26 C.F.R. § 1.472-3 . At the time Powell elected LIFO, it was no longer “using” the FIFO statements, inasmuch as they had been recalled prior to the election and LIFO statements reissued.”
Credit Life Ins. v. United States, 24 Cl. Ct. 723 (Fed. Cir. 1991).
“The regulation in Fischer is not comparable to the regulation in this appeal because the Fischer regulation contemplates that a statement of election “be made on form 970 pursuant to the instructions printed with respect thereto and to the requirements of this section, or in…”
— 26 C.F.R. § 1.472-3(a) — 1 case
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