30177

(a) The taxpayer may use the following method, whether or not prescribed under § 30101(a)(2)(B) of this title, in inventorying goods specified in an application required under subsection (b):(1) Inventory them at cost;(2) treat those remaining on hand at the close of the taxable year as being: first, those included in the opening inventory of the taxable year, in the order of acquisition, to the extent thereof; and second, those acquired in the taxable year, and(3) treat those included in the opening inventory of the taxable year in which such method is first used as having been acquired at the same time and determine their cost by the average cost method.(b) The method prescribed in subsection (a) may be used:(1) only in inventorying goods that under § 30101(a)(2)(B) of this title are required to be inventoried, specified in an application to use the method filed at such time and in the manner as the Secretary may prescribe; and(2) only if the taxpayer establishes, to the satisfaction of the Secretary, that the taxpayer has used no procedure other than that specified in clauses (2) and (3) of subsection (a) in inventorying such goods to ascertain the income, profit, or loss of

ion of the Secretary, that the taxpayer has used no procedure other than that specified in clauses (2) and (3) of subsection (a) in inventorying such goods to ascertain the income, profit, or loss of the first taxable year for which the method described in subsection (a) is to be used, for the purpose of a report or statement covering such taxable year:(A) To shareholders, partners, or other proprietors or beneficiaries, or(B) for credit purposes.(c) The change to, and the use of, such method shall be in accordance with the regulations the Secretary may prescribe as necessary in order that the use of such method may clearly reflect income.(d) In determining the income for the taxable year preceding the taxable year in which such method was first used, the final inventory of such preceding taxable year of the goods specified in the application shall be valued at cost.(e) If a taxpayer, having complied with subsection (b), uses the method described in subsection (a) for any taxable year, then it shall be used in all subsequent taxable years unless:(1) With the approval of the Secretary, a change to a different method is authorized, or(2) the Secretary determines that the taxpayer

ar, then it shall be used in all subsequent taxable years unless:(1) With the approval of the Secretary, a change to a different method is authorized, or(2) the Secretary determines that the taxpayer has used for any subsequent taxable year some procedure other than that specified in subsection (a)(2) of this section in inventorying the goods specified in the application to ascertain the income, profit, or loss of the subsequent taxable year for the purpose of a report or statement covering such taxable year,(A) to shareholders, partners, or other proprietors or beneficiaries, or(B) for credit purposes;and requires a change to a method different from that prescribed in subsection (a) beginning with such subsequent taxable year or any taxable year thereafter.(3) In any of such cases, the change to, and the use of, the different method shall be in accordance with such regulations as the Secretary may prescribe as necessary in order that the use of such method may accurately reflect income. History —Jan. 31, 2011, No. 1, § 1040.07, retroactive to Jan. 1, 2011; Dec. 10, 2011, No. 232, § 46.