-35-
In 1944, section 29.22(d)-1 of Regulations 111 was amended
to add in pertinent part the following language:
A manufacturer or processor who has adopted the
elective [LIFO] inventory method as to a class of goods
may elect to have such method apply to the raw
materials only (including those included in goods in
process and in finished goods) expressed in terms of
appropriate units. * * *
* * * * * * *
This election may also apply to any one raw
material, when two or more raw materials enter into the
composition of the finished product * * *
9 Fed. Reg. 12336, 12337 (Oct. 11, 1944). (We shall refer to the
amendment in 1944 to section 29.22(d)-1 of Regulations 111 as the
1944 amendment to section 29.22(d)-1 of Regulations 111.)
Section 22(d)(1) through (3) of the 1939 Code as amended was
reenacted with changes not pertinent here as section 472(a) and
(b) of the 1954 Code, ch. 736, sec. 472(a) and (b), 68A Stat.
159, and the latter section was reenacted with no changes as
section 472(a) and (b) of the 1986 Code, see Tax Reform Act of
1986, Pub. L. 99-514, sec. 2, 100 Stat. 2095. Sections 29.22(d)-
1 and -2 of Regulations 111, including the 1944 amendment to
section 29.22(d)-1 of Regulations 111, were repromulgated with
changes not pertinent here as regulations under section 472.
With this history as background, we shall address the
disagreement between the parties over whether Consolidated's LIFO
method contravenes the requirements of section 472 and the
regulations thereunder and therefore does not clearly reflect
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