Sec. 3310. Repeal of last-in, first-out method of inventory
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Section 471 is amended by redesignating subsection
(c)as subsection
(d)and by inserting after subsection
(b)the following new subsection: The last-in, first-out method of determining inventories shall in no event be treated as clearly reflecting income. . Subpart D of part II of subchapter E of chapter 1 is amended by striking sections 472, 473, and 474 (and by striking the items relating to such sections in the table of sections for such subpart). Section 312(n), as amended by the preceding provisions of this Act, is amended by striking paragraph
(3)and by redesignating paragraphs
(4)through
(7)as paragraphs
(3)through (6), respectively. Section 312(n)(6), as amended by the preceding provisions of this Act, is amended— by striking paragraphs
(4)and
(6)in subparagraph
(A)and inserting paragraph
(4), and by striking paragraph
(5)in subparagraph
(B)and inserting paragraph
(3). Section 301(e)(3), as amended by the preceding provisions of this Act, is amended— by striking paragraph
(6)and inserting paragraph
(5), and by striking in the heading and inserting section 312(n)(6) . section 312(n)(5) Section 952(c)(3), as amended by the preceding provisions of this Act, is amended by striking paragraphs (3), (4), and
(5)and inserting paragraphs (2), (3), and
(4). Section 1293(e)(3), as amended by the preceding provisions of this Act, is amended by striking paragraphs (3), (4), and
(5)and inserting paragraphs (2), (3), and
(4). Section 1503(e)(2)(C), as amended by the preceding provisions of this Act, is amended— by striking paragraph
(6)and inserting paragraph
(5), and by striking in the heading and inserting section 312(n)(6) . section 312(n)(5) Section 1363 is amended by striking subsection (d). The amendments made by this section shall apply to taxable years beginning after December 31, 2014. In the case of any taxpayer required by the amendments made by this section to change its method of accounting for its first taxable year beginning after December 31, 2014— such change shall be treated as initiated by the taxpayer, such change shall be treated as made with the consent of the Secretary of the Treasury, and if the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 by reason of such change is positive— such amount shall be taken into account during the 4-taxable year period beginning with the earlier of the taxpayer’s elected taxable year or the taxpayer’s first taxable year beginning after December 31, 2018, as follows: 10 percent of such amount in the first taxable year in such period, 15 percent of such amount in the second taxable year in such period, 25 percent of such amount in the third taxable year in such period, and 50 percent of such amount in the fourth taxable year in such period, and for purposes of applying the regulations and other guidance issued under such section (including any provisions which require accelerated inclusion), the period beginning with the taxpayer’s first taxable year beginning after December 31 2014, and ending with the taxable year before the first taxable year referred to in clause
(i)shall not fail to be taken into account as part of the period of the adjustment merely because such amount is not otherwise taken into account under clause
(i)during such period. For purposes of this subsection, the term elected taxable year means such taxable year as the taxpayer may elect (at such time and in such form and manner as the Secretary may provide) which begins after December 31, 2014, and is before the taxpayer’s second taxable year beginning after December 31, 2018. In the case of any closely-held entity, paragraph (1)(C) shall be applied by treating any reference to such amount as a reference to 20 percent (28 percent in the case of a C corporation) of such amount. For purposes of this paragraph— The term closely-held entity means any domestic corporation or domestic partnership which— is not an ineligible entity, does not have more than 100 shareholders or partners (as the case may be), and does not have as a shareholder or partner a person (other than an estate, a trust described in section 1361(c)(2) of the Internal Revenue Code of 1986, or an organization described section 1361(c)(6) of such Code) who is not an individual. An entity shall not fail to be treated as a closely-held entity by reason of clause (i)(III) if all of the interests in such entity are held by a single closely-held entity (determined without regard to this clause) and individuals taken into account under clause (i)(II) with respect to such entity. In the case of tiered entities (other than the top tier entity), the preceding sentence shall be applied— by substituting (determined after application of this clause) for (determined without regard to this clause) , and by substituting with respect to the top tier entity for with respect to such entity . The term ineligible entity means any entity described in section 1361(b)(2) of the Internal Revenue Code of 1986 applied by substituting corporation or partnership for corporation each place it appears. The status of any entity as a closely-held entity shall be determined as of February 26, 2014. An individual operating a trade or business shall be treated as a closely-held entity. In the case of any specified inventory transfer, the adjustments referred to in paragraph (1)(C) shall be determined— with respect to the transferor, as though the property transferred continued to be held at all times by such transferor, and with respect to the transferee, as though such property was never transferred to such transferee. The term specified inventory transfer means any transfer of property described in section 1221(a)(1) if— such transfer is to a closely-held entity from any person who is not a closely-held entity, such transfer is on or after February 26, 2014, and before the beginning of the transferor’s first taxable year beginning after December 31, 2014, and the basis of such property in the hands of the transferee immediately after such transfer is either determined by reference to the basis of such property in the hands of the transferor or is less than the fair market value of such property at the time of such transfer.