2012 US Code
Title 26 - Internal Revenue Code
Subtitle A - Income Taxes (§§ 1 - 1564)
Chapter 1 - NORMAL TAXES AND SURTAXES (§§ 1 - 1400U-3)
Subchapter E - Accounting Periods and Methods of Accounting (§§ 441 - 483)
Part II - METHODS OF ACCOUNTING (§§ 446 - 475)
Subpart D - Inventories (§§ 471 - 475)
Section 474 - Simplified dollar-value LIFO method for certain small businesses
Publication Title | United States Code, 2012 Edition, Title 26 - INTERNAL REVENUE CODE |
Category | Bills and Statutes |
Collection | United States Code |
SuDoc Class Number | Y 1.2/5: |
Contained Within | Title 26 - INTERNAL REVENUE CODE Subtitle A - Income Taxes CHAPTER 1 - NORMAL TAXES AND SURTAXES Subchapter E - Accounting Periods and Methods of Accounting PART II - METHODS OF ACCOUNTING Subpart D - Inventories Sec. 474 - Simplified dollar-value LIFO method for certain small businesses |
Contains | section 474 |
Date | 2012 |
Laws in Effect as of Date | January 15, 2013 |
Positive Law | No |
Disposition | standard |
Source Credit | Added Pub. L. 97-34, title II, §237(a), Aug. 13, 1981, 95 Stat. 252; amended Pub. L. 99-514, title VIII, §802(a), Oct. 22, 1986, 100 Stat. 2348. |
Statutes at Large References | 95 Stat. 252, 253 100 Stat. 2348, 2350 |
Public Law References | Public Law 97-34, Public Law 99-514 |
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An eligible small business may elect to use the simplified dollar-value method of pricing inventories for purposes of the LIFO method.
(b) Simplified dollar-value method of pricing inventoriesFor purposes of this section—
(1) In generalThe simplified dollar-value method of pricing inventories is a dollar-value method of pricing inventories under which—
(A) the taxpayer maintains a separate inventory pool for items in each major category in the applicable Government price index, and
(B) the adjustment for each such separate pool is based on the change from the preceding taxable year in the component of such index for the major category.
(2) Applicable Government price indexThe term “applicable Government price index” means—
(A) except as provided in subparagraph (B), the Producer Price Index published by the Bureau of Labor Statistics, or
(B) in the case of a retailer using the retail method, the Consumer Price Index published by the Bureau of Labor Statistics.
(3) Major categoryThe term “major category” means—
(A) in the case of the Producer Price Index, any of the 2-digit standard industrial classifications in the Producer Prices Data Report, or
(B) in the case of the Consumer Price Index, any of the general expenditure categories in the Consumer Price Index Detailed Report.
(c) Eligible small businessFor purposes of this section, a taxpayer is an eligible small business for any taxable year if the average annual gross receipts of the taxpayer for the 3 preceding taxable years do not exceed $5,000,000. For purposes of the preceding sentence, rules similar to the rules of section 448(c)(3) shall apply.
(d) Special rulesFor purposes of this section—
(1) Controlled groups (A) In generalIn the case of a taxpayer which is a member of a controlled group, all persons which are component members of such group shall be treated as 1 taxpayer for purposes of determining the gross receipts of the taxpayer.
(B) Controlled group definedFor purposes of subparagraph (A), persons shall be treated as being component members of a controlled group if such persons would be treated as a single employer under section 52.
(2) Election (A) In generalThe election under this section may be made without the consent of the Secretary.
(B) Period to which election appliesThe election under this section shall apply—
(i) to the taxable year for which it is made, and
(ii) to all subsequent taxable years for which the taxpayer is an eligible small business,
unless the taxpayer secures the consent of the Secretary to the revocation of such election.
(3) LIFO methodThe term “LIFO method” means the method provided by section 472(b).
(4) Transitional rules (A) In generalIn the case of a year of change under this section—
(i) the inventory pools shall—
(I) in the case of the 1st taxable year to which such an election applies, be established in accordance with the major categories in the applicable Government price index, or
(II) in the case of the 1st taxable year after such election ceases to apply, be established in the manner provided by regulations under section 472;
(ii) the aggregate dollar amount of the taxpayer's inventory as of the beginning of the year of change shall be the same as the aggregate dollar value as of the close of the taxable year preceding the year of change, and
(iii) the year of change shall be treated as a new base year in accordance with procedures provided by regulations under section 472.
(B) Year of changeFor purposes of this paragraph, the year of change under this section is—
(i) the 1st taxable year to which an election under this section applies, or
(ii) in the case of a cessation of such an election, the 1st taxable year after such election ceases to apply.
(Added Pub. L. 97–34, title II, §237(a), Aug. 13, 1981, 95 Stat. 252; amended Pub. L. 99–514, title VIII, §802(a), Oct. 22, 1986, 100 Stat. 2348.)
Amendments1986—Pub. L. 99–514 amended section generally, substituting provisions relating to election by eligible small business to use simplified dollar-value method of pricing inventories for purposes of LIFO method for provisions relating to election by eligible small business which uses dollar-value method of pricing inventories under method provided by section 472(b) of this title to use one inventory pool for any trade or business of such eligible small business.
Effective Date of 1986 AmendmentPub. L. 99–514, title VIII, §802(c), Oct. 22, 1986, 100 Stat. 2350, provided that:
“(1)
“(2)
Pub. L. 97–34, title II, §237(c), Aug. 13, 1981, 95 Stat. 253, provided that: “The amendments made by this section [enacting this section] shall apply to taxable years beginning after December 31, 1981.”
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