For income tax purposes, if the NRV of inventory at year end is lower than cost, the company is permitted:

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The company is permitted to take a tax deduction for the amount of the loss, as the NRV is used to determine the lower of cost or market value of inventory for tax purposes. Therefore, the difference between cost and NRV represents a loss that can be deducted as a tax deductible expense.

For Income Tax Purposes, If the NRV of Inventory at Year