Simplified Dollar-Value LIFO Election

§ 474. Simplified dollar-value LIFO method for certain small businesses(a) General ruleAn 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).