What if detail is not available for all inventory (i.e. no listing of in-transit inventory at year end)?
In some cases, taxpayers are unable to obtain a detailed listing of inventory on hand at year end for certain portions of inventory, such as in-transit inventory that is on the water or in trucks. Depending on the type of inventory that the taxpayer carries, a summary of the in-transit contents and the dollar value may be sufficient for LIFO purposes. Another possible option for treating such inventory is making an allocation of similar types of inventory across the dollar value for the in-transit inventory. If another solution cannot be reached, the inventory will be excluded from the inflation index calculation and included in the total current year cost value utilized to calculate the LIFO reserve (i.e. treated as an adjustment to the current year cost). When determining the appropriate approach, taxpayers must consider the materiality of the dollar value for the inventory that is not available at the detail level, in relation to the total current year cost.
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