-46-
Pursuant to section 1.472-1(c), Income Tax Regs., a manufacturer
or processor "may elect to have such [LIFO inventory] method
apply to the raw materials only (including those included in
goods in process and in finished goods)"; such an election is not
made with respect to the costs of such raw materials. Petitioner
takes the reference in section 1.472-1(c), Income Tax Regs., to
"costs of the raw material" out of context and misstates the
reason for that reference in that regulation. Once a manu-
facturer or processor has elected the raw material content LIFO
inventory method as to one or more raw materials (including those
included in goods in process and in finished goods), such a
taxpayer is required by section 472(b)(2) to inventory such raw
material(s) at cost. That is why section 1.472-1(c), Income Tax
Regs., states:
If such method [the raw material content LIFO inventory
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
(...continued)
that a second raw material cannot be valued under FIFO
* * *
We disagree. The examples in sec. 1.472-1(c), Income Tax Regs.,
merely illustrate how the adjustments should be made under the
raw material content LIFO inventory method. Even if a taxpayer
were to rely on those examples in calculating the adjustments
under such taxpayer's LIFO inventory method, that taxpayer would
not be able to use such a method unless it were permitted by or
not inconsistent with sec. 472 and the regulations thereunder.
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