-48-
To the contrary, we find section 1.472-1(c), Income Tax
Regs., to be consistent with respondent’s position regarding
Consolidated's LIFO method. The Secretary promulgated that
regulation under the authority granted by section 472(a) to
prescribe regulations "as necessary in order that the use of such
[LIFO inventory] method may clearly reflect income".15 As
discussed above, the raw material content LIFO inventory method
authorized by section 1.472-1(c), Income Tax Regs., permits a
manufacturer or processor who has adopted the LIFO inventory
method with respect to a class of goods to apply that method to
"the raw materials only (including those included in goods in
process and in finished goods)". Raw materials are goods.
(...continued)
overhead in question ultimately were allowed to be on, or
ultimately were disallowed from being on, the LIFO inventory
method upon examination of the income tax returns of the
taxpayer. To the extent that Tech. Adv. Mem. 94-45-004 may be
read to suggest that a taxpayer may validly elect the LIFO
inventory method with respect to all of its labor and overhead,
but not all of its raw materials, that enter into the production
of a good or type or class of goods, we reject any such
suggestion as contrary to sec. 472 and the regulations
thereunder.
15 The position of the Secretary in sec. 1.472-1(c), Income
Tax Regs., is identical to the position taken by the Commissioner
and approved by the Secretary under the original predecessor of
sec. 472 (viz, sec. 22(d)(2) of the 1939 Code as amended), which
was set forth in the 1944 amendment to sec. 29.22(d)-1 of
Regulations 111. We have found nothing in sec. 472, its
predecessor provisions, or their legislative history which
establishes that sec. 1.472-1, Income Tax Regs., and its
predecessor regulations, as they relate to the raw material
content LIFO inventory method, were intended to be anything other
than a proper interpretation of the statutory language under
which those regulations were promulgated.
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