Coordinated Issue Paper released on bargain purchases

The IRS continues to press the issues raised by the Tax Court in Hamilton Industries (1991), with respect to bargain purchases of inventory. In a Coordinated Issue Paper released September 12, 1995, the IRS has asserted that, for purposes of calculating inventory value under the dollar-value LIFO me...

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Bibliographic Details
Published in:The Tax Adviser 1996-01, Vol.27 (1), p.21
Main Authors: Tovig, Barry A, Vance, Scott W
Format: Magazinearticle
Language:English
Subjects:
97 TC 120
Accounting and auditing
Accounting changes
Discounts
Inventories
Inventory costing methods
Laws, regulations and rules
LIFO
Recognition of gain or loss (Taxation)
State court decisions
Tax accounting
Tax court decisions
Taxpayers
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Summary:The IRS continues to press the issues raised by the Tax Court in Hamilton Industries (1991), with respect to bargain purchases of inventory. In a Coordinated Issue Paper released September 12, 1995, the IRS has asserted that, for purposes of calculating inventory value under the dollar-value LIFO method, inventories purchased in bulk at discounted amounts are generally treated as separate items from goods purchased or produced subsequently. Such treatment would effectively eliminate the ability under LIFO to include the discounted inventory values in old layers. The question of how far the IRS will pursue its analysis remains.
ISSN:0039-9957