-39-
Petitioner concedes in its opening brief that "Section 472
and the Regulations promulgated thereunder are worded in terms of
electing to value "goods" under the LIFO method". However,
according to petitioner:
Treasury Regulation Section 1.471-3(c) is clear that
the "cost" of finished and partly finished goods
consist [sic] of the "cost" of raw materials, labor and
overhead. * * * Thus, * * * the finished and partly
finished goods included in such an [LIFO] election
necessarily consist of the cost attributable to raw
materials, labor, and overhead.
Petitioner elaborates on the foregoing argument in its answering
brief, as follows:
Treasury Regulation Section 1.472-1 provides that
"[a]ny taxpayer permitted or required to take
inventories pursuant to the provisions of section 471,
and pursuant to the provisions of �� 1.471-1 to 1.471-
9, inclusive, may elect with respect to those goods
specified in his application and properly subject to
inventories to compute his opening and closing
inventories in accordance with" the LIFO method.
Treas. Reg. �1.472-1(a). The cost of raw materials,
the cost of labor, and the cost of overhead are
expressly identified as inventoriable costs in Treasury
Regulation Section 1.471-3(c). Hence, such costs are
included within the specified provisions identified in
Treasury Regulation Section 1.472-1(a) for which the
LIFO inventory method is expressly made available.
Respondent may not, therefore, deny Petitioner's right
to elect the LIFO method for labor and overhead costs
or condition its right to make such an election on
electing LIFO for the "good" produced by such labor and
overhead.
We agree with respondent. We find petitioner's
interpretation of sections 1.471-3(c) and 1.472-1(a), Income Tax
Regs., on which it relies to be strained, and its reliance on
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