When the production, purchase, or sale of merchandiseis an income producing factor, inventories at the beginning and ending of each taxableyear are necessary in order to correctly compute income. In these cases, inventoriesshall be taken, computed and used in accordance with the methods prescribed or permittedby the Internal Revenue Service pursuant to 26 U.S.C. §§263A, 471, 472 and 474 andregulations thereunder.

Author: Ewell Berry, Ann F. Winborne, CPA, Ed Cutter, CPA

Statutory Authority: Code of Ala. 1975, §§40-2A-7(a)(5), 40-18-11.

History: Rule effective October 1, 1982. Amended: Filed July 27, 1988; May 15, 1992.Amended: Filed September 18, 1996; effective October 23, 1996. Amended: Filed April 28,1999; effective June 2, 1999.