Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 70-19

1970-1 C.B. 123

IRS Headnote

The "cost" to be compared with "market" by a corporation using the lower of cost or market method where items in its ending inventory were included in beginning inventory; I.T. 1561 superseded.

Full Text

Rev. Rul. 70-19 /1/

The inventory at the close of a taxable year of a corporation that values its inventories at cost or market value whichever is lower includes goods that were included in its inventory at the beginning of the taxable year.

Held, in valuing the inventory at the close of the taxable year, the "cost" to be compared with "market" in applying the basis of cost or market whichever is lower as provided by section 1.471-4 of the Income Tax Regulations, should be the price at which the goods were included in the opening inventory since section 1.471-3 of the regulations provides that "cost of merchandise on hand at beginning of the taxable year" means the inventory price of such goods.

I.T. 1561, C.B. II-1, 30 (1923), is superseded since the position stated therein is restated under the current statute and regulations in this Revenue Ruling.

/1/ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.