In the case of a taxpayer who uses the lower-of-cost-or-market inventory method:
A)Taxpayers may not use the lower of cost or market method for tax purposes.
B)Market price means the expected selling price.
C)Taxpayers may deduct a reserve for anticipated inventory price changes.
D)Each inventory item must be valued at the lower of its cost or its market value.
E)None of the above.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market method requires each inventory item to be valued at the lower of its historical cost or its current market value, which is typically the replacement cost, not the expected selling price.

In the Case of a Taxpayer Who Uses the Lower-Of-Cost-Or-Market