-44-
Petitioner also relies on section 1.472-1(c), Income Tax
Regs., to support the validity of Consolidated’s LIFO method.
Petitioner asserts:
Respondent apparently believes that Treasury
Regulation 1.472-1(c) supports her position in this
matter. To the contrary. Treasury Regulation Section
1.472-1(c) contradicts her argument that the LIFO
inventory method may only be elected with respect to
goods. Under the raw material content method, a
taxpayer's LIFO election is limited to the cost of raw
materials, including the cost of the raw material
content of work-in-progress and finished goods. Treas.
Reg. � 1.472-1(c). The Regulation describes the manner
in which a taxpayer may segregate the cost of one or
more raw materials from work-in-progress and finished
goods and value those costs using LIFO, while all other
costs associated with work-in-progress and the finished
good are valued under the FIFO convention. Thus, a
taxpayer using the raw material content method elects
to value the cost of raw materials (including the cost
of raw materials incorporated into work-in-progress and
finished goods) using the LIFO convention, not the raw
material themselves. Rather than support her position
in this matter, Treasury Regulation Section 1.472-1(c)
provides further evidence of the validity of
Petitioner's [sic] LIFO election. In addition,
Respondent's attempt to characterize the raw material
content method as the single "permissive variance to
the inclusion of the total goods in LIFO" is not an
accurate statement of the law. * * *
We disagree with the foregoing contentions of petitioner as
to what section 1.472-1(c), Income Tax Regs., which permits a
taxpayer to elect what we shall refer to as the raw material
content LIFO inventory method, provides and allows. We reject
petitioner’s position that that regulation "contradicts * * *
[respondent’s] argument that the LIFO inventory method may only
be elected with respect to goods." Section 1.472-1(c), Income
Tax Regs., which is virtually identical to the 1944 amendment to
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