- 32 -
Although, as petitioner points out, application of the average
unit cost method under section 1.472-8(e)(2)(ii)(c), Income Tax
Regs., might not result in assigning a unit cost equal to the
actual cost of any units purchased or produced during the taxable
year, the determination of the current-year cost of items making
up a pool under that regulation is required to be made on the
basis of, or by reference to, the actual cost of all goods
purchased or produced during the taxable year. That regulation
thus complies with the mandate of section 472(b)(2) that actual
cost be used.
As we have just explained, each of the methods prescribed in
section 1.472-8(e)(2)(ii)(a), (b), and (c), Income Tax Regs.,
relating to the dollar-value LIFO method mandates, as required by
section 472(b)(2), that the determination of the current-year
cost of items making up a pool be made on the basis of, or by
reference to, actual cost.14 We conclude that, in order for a
14 Pursuant to the requirement of sec. 472(b)(2), each of
the methods prescribed in sec. 1.472-2(d)(1)(i)(a), (b), and (c),
Income Tax Regs., relating to the specific-goods LIFO method also
mandates that the cost of goods on hand as of the close of the
taxable year with respect to which the taxpayer elected the LIFO
method and which are in excess of what were on hand as of the
beginning of the taxable year be determined on the basis of, or
by reference to, the actual cost of certain or all of the goods
purchased or produced during the taxable year, regardless of
identification with specific invoices and regardless of specific
cost accounting records. See sec. 1.472-2(d), Income Tax Regs.
Consistent with sec. 472(b)(2), sec. 472(b)(3) and the regula-
tions thereunder specifically require that goods with respect to
which a taxpayer elected the LIFO method that are included in the
opening inventory of the taxable year for which the LIFO method
is first used are to be considered as having been acquired at
the same time and at a unit cost determined by reference to the
(continued...)
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