-45-
section 29.22(d)-1 of Regulations 111, provides in pertinent
part:
(c) A manufacturer or processor who has adopted
the 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. If such method is adopted, the adjustments are
confined to costs of the raw material in the inventory
and the cost of the raw material in goods in process
and in finished goods produced by such manufacturer or
processor and reflected in the inventory. * * *
Section 1.472-1(j), Income Tax Regs., as did the 1944 amendment
to section 29.22(d)-1 of Regulations 111, states that the
election under section 1.472-1(c), Income Tax Regs., may "apply
to any one raw material, when two or more raw materials enter
into the composition of the finished product". We disagree with
petitioner’s assertions that, under section 1.472-1(c), Income
Tax Regs.,
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. * * *
[A] taxpayer using the raw material content [LIFO
inventory] 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 materials
themselves. * * *[12] [Emphasis added.]
12 Petitioner also contends that, because the examples in
sec. 1.472-1(c), Income Tax Regs., illustrate the manner in which
a raw material may be accounted for on the raw material content
LIFO inventory method and labor and overhead on the FIFO
inventory method,
It is not logical to conclude that when LIFO is elected
for one raw material, together with labor and overhead,
(continued...)
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