Sec. 3311. Repeal of lower of cost or market method of inventory
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Section 471, as amended by the preceding provisions of this Act, is amended by redesignating subsection
(d)as subsection
(e)and by inserting after subsection
(c)the following new subsection: The lower of cost or market method of determining inventories shall in no event be treated as clearly reflecting income. For purposes of the preceding sentence, the lower of cost or market shall include the lower of cost or bona fide net selling price. . 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.