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USC Title 26 enacted through 2008

§ 473. Qualified liquidations of LIFO inventories

General rule
If, for any liquidation year -
there is a qualified liquidation of goods which the taxpayer inventories under the LIFO method, and
the taxpayer elects to have the provisions of this section apply with respect to such liquidation,
then the gross income of the taxpayer for such taxable year shall be adjusted as provided in subsection (b).
Adjustment for replacements
If the liquidated goods are replaced (in whole or in part) during any replacement year and such replacement is reflected in the closing inventory for such year, then the gross income for the liquidation year shall be -
decreased by an amount equal to the excess of -
the aggregate replacement cost of the liquidated goods so replaced during such year, over
the aggregate cost of such goods reflected in the opening inventory of the liquidation year, or
increased by an amount equal to the excess of -
the aggregate cost reflected in such opening inventory of the liquidated goods so replaced during such year, over
such aggregate replacement cost.
Qualified liquidation defined
For purposes of this section -
In general
The term "qualified liquidation" means -
a decrease in the closing inventory of the liquidation year from the opening inventory of such year, but only if
the taxpayer establishes to the satisfaction of the Secretary that such decrease is directly and primarily attributable to a qualified inventory interruption.
Qualified inventory interruption defined
In general
The term "qualified inventory interruption" means a regulation, request, or interruption described in subparagraph (B) but only to the extent provided in the notice published pursuant to subparagraph (B).
Determination by Secretary
Whenever the Secretary, after consultation with the appropriate Federal officers, determines -
that -
any Department of Energy regulation or request with respect to energy supplies, or
any embargo, international boycott, or other major foreign trade interruption,
has made difficult or impossible the replacement during the liquidation year of any class of goods for any class of taxpayers, and
that the application of this section to that class of goods and taxpayers is necessary to carry out the purposes of this section,
he shall publish a notice of such determinations in the Federal Register, together with the period to be affected by such notice.
Other definitions and special rules
For purposes of this section -
Liquidation year
The term "liquidation year" means the taxable year in which occurs the qualified liquidation to which this section applies.
Replacement year
The term "replacement year" means any taxable year in the replacement period; except that such term shall not include any taxable year after the taxable year in which replacement of the liquidated goods is completed.
Replacement period
The term "replacement period" means the shorter of -
the period of the 3 taxable years following the liquidation year, or
the period specified by the Secretary in a notice published in the Federal Register with respect to that qualified inventory interruption.
Any period specified by the Secretary under subparagraph (B) may be modified by the Secretary in a subsequent notice published in the Federal Register.
LIFO method
The term "LIFO method" means the method of inventorying goods described in section 472.
In general
An election under subsection (a) shall be made subject to such conditions, and in such manner and form and at such time, as the Secretary may prescribe by regulation.
Irrevocable election
An election under this section shall be irrevocable and shall be binding for the liquidation year and for all determinations for prior and subsequent taxable years insofar as such determinations are affected by the adjustments under this section.
Replacement; inventory basis
For purposes of this chapter -
If the closing inventory of the taxpayer for any replacement year reflects an increase over the opening inventory of such goods for such year, the goods reflecting such increase shall be considered, in the order of their acquisition, as having been acquired in replacement of the goods most recently liquidated (whether or not in a qualified liquidation) and not previously replaced.
Amount at which replacement goods taken into account
In the case of any qualified liquidation, any goods considered under paragraph (1) as having been acquired in replacement of the goods liquidated in such liquidation shall be taken into purchases and included in the closing inventory of the taxpayer for the replacement year at the inventory cost basis of the goods replaced.
Special rules for application of adjustments
Period of limitations
If -
an adjustment is required under this section for any taxable year by reason of the replacement of liquidated goods during any replacement year, and
the assessment of a deficiency, or the allowance of a credit or refund of an overpayment of tax attributable to such adjustment, for any taxable year, is otherwise prevented by the operation of any law or rule of law (other than section 7122, relating to compromises),
then such deficiency may be assessed, or credit or refund allowed, within the period prescribed for assessing a deficiency or allowing a credit or refund for the replacement year if a notice for deficiency is mailed, or claim for refund is filed, within such period.
Solely for purposes of determining interest on any overpayment or underpayment attributable to an adjustment made under this section, such overpayment or underpayment shall be treated as an overpayment or underpayment (as the case may be) for the replacement year.
Coordination with section 472
The Secretary shall prescribe such regulations as may be necessary to coordinate the provisions of this section with the provisions of section 472.

Tax Code (Internal Revenue Code) Section Index

U.S. GAAP by Codification Topic
105 GAAP Hierarchy
105 GAAP History

205 Presentation of Financial Statements
205-20 Discontinued Operations
210 Balance Sheet
210-20 Offsetting
220 Comprehensive Income
225 Income Statement
225-20 Extraordinary and Unusual Items
230 Statement of Cash Flows
250 Accounting Changes and Error Corrections
260 Earnings per Share
270 Interim Reporting

310 Impairment of a Loan
320 Investment Securities
320 Other-Than-Temporary Impairments, FSP FAS 115-2
320-10-05 Overview of Investments in Other Entities
320-10-35 Reclassification of Investments in Securities
323-10 Equity Method Investments
323-30 Investments in Partnerships and Joint Ventures
325-20 Cost Method Investments
330 Inventory

340-20 Capitalized Advertising Costs
350-20 Goodwill
350-30 Intangibles Other than Goodwill
350-40 Internal-Use Software
350-50 Website Development Costs
360 Property, Plant and Equipment
360-20 Real Estate Sales

410 Asset Retirement and Environmental Obligations
420 Exit or Disposal Cost Obligations
450 Contingencies
450-20 Loss Contingencies
450-30 Gain Contingencies
480 Redeemable Financial Instruments

505-20 Stock Dividends, Stock Splits
505-30 Treasury Stock

605 SEC Staff Accounting Bulletin, Topic 13
605-25 Revenue Recognition - Multiple Element Arrangements

715-30 Defined Benefit Plans - Pension
718 Share-Based Payment
730 Research and Development
730-20 Research and Development Arrangements

805 Business Combinations
810 Consolidation
810 Noncontrolling Interests
810 Consolidation of Variable Interest Entities, SFAS 167

815 Derivatives and Hedging Overview

820 Fair Value Measurements
820 Fair value when the markets are not active, FSP FAS 157-4
825 Fair Value Option

830 Foreign Currency Matters
830-20 Foreign Currency Transactions
830-30 Translation of Financial Statements
835 Interest
835-20 Capitalization of Interest
835-30 Imputation of Interest

840 Leases
840-20 Operating Leases
840-30 Capital Leases
840-40 Sale-Leaseback Transactions
845 Nonmonetary Transactions

855 Subsequent Events
860-20 Sale of Financial Assets, SFAS 166
860-50 Servicing Assets and Liabilities, SFAS 156

985-20 Costs of software to be sold

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Tax Code (Internal Revenue Code) Section Index

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