-32-
accounting, the FIFO inventory method, and the LIFO inventory
method. The use of inventories was first required by the Revenue
Act of 1918 (1918 Act), ch. 18, sec. 203, 40 Stat. 1060,
whenever, in the opinion of the Commissioner, such use was
necessary in order to determine clearly the income of any
taxpayer.7 Where goods taken in inventory were so intermingled
that they could not be identified with specific invoices, Article
1582 of Regulations 45, promulgated under the 1918 Act, deemed
such goods to be the goods most recently purchased or produced.
In other words, in such circumstances, taxpayers were to use the
FIFO inventory method as a matter of convenience.8 See Ozark
Mills, Inc. v. Commissioner, 6 B.T.A. 1179, 1183-1184 (1927).
It was not until the Revenue Act of 1938 (1938 Act), ch.
289, 52 Stat. 447, that Congress first allowed certain taxpayers
(viz, producers and processors of certain nonferrous metals and
tanners) who were required to use the inventory accounting method
to elect the LIFO inventory method for certain goods included in
their inventories. 1938 Act, sec. 22(d)(1) through (3), 52 Stat.
459. Effective for taxable years that began after December 31,
1938, producers and processors of certain nonferrous metals
7 Sec. 203 of the Revenue Act of 1918, ch. 18, sec. 203, 40
Stat. 1060, was the original predecessor of sec. 471.
8 The FIFO inventory method is expressly permitted by sec.
1.471-2(d), Income Tax Regs., when goods taken in inventory are
so intermingled that they cannot be identified with specific
invoices.
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