The IRS Practice Unit Lower of Cost or Market is a guide that helps taxpayers determine the value of their inventory. It explains the rules for valuing inventory and provides examples of how to apply them. The guide also covers the different methods of valuing inventory and the requirements for using each method.
The IRS Large Business and International (LB&I) division publicly released a “practice unit”—part of a series of IRS examiner “job aides” and training materials intended to describe for IRS agents leading practices about tax concepts in general and specific types of transactions.
The title of the “concept” unit (as referred to by the IRS) is:
The concept unit is available on the IRS practice unit webpage (dated June 7, 2024) and applies to taxpayers engaged in the sale of inventory.
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