Inventory planning

In implementing the natural business unit (NBU) pooling method, a taxpayer that used the dollar value LIFO method in valuing its inventories established one NBU of all of its domestic product manufacturing and distribution for both tax and financial reporting purposes. In Letter Ruling 9129004, the...

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Bibliographic Details
Published in:The Tax Adviser 1992-01, Vol.23 (1), p.40
Main Authors: Godbout, James C, Coplan, Robert B
Format: Magazinearticle
Language:English
Subjects:
Alternative minimum tax
Cost control
Inventory control
Inventory costing methods
LIFO
Preferences
Tax regulations
Taxable income
Taxation
Taxpayers
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Summary:In implementing the natural business unit (NBU) pooling method, a taxpayer that used the dollar value LIFO method in valuing its inventories established one NBU of all of its domestic product manufacturing and distribution for both tax and financial reporting purposes. In Letter Ruling 9129004, the IRS ruled that a NBU pool was inappropriate and that several pools were necessary under Regs. Section 1.472-8(b)(2). On another matter, a simpler alternative in the computation of pre-adjustment alternative minimum tax (AMT) income and adjusted current earnings (ACE), Prop. Regs. Section 1.56(g)-1(r) provide that taxpayers may elect to use their regular tax inventory amounts for these purposes. Thus, taxpayers making the election would use the cost-of-goods-sold figure that was used in computing taxable income for regular tax, AMT, and ACE purposes.
ISSN:0039-9957