The Little River news., 1921-12-24
INCOME TAX COLLECTOR
 ISSUES STATEMENT
Inventory Not Difficult Under New Act Which Remains Same as
 Act of 1918.

Act Of IBIS.
 Little Rock Dec. 21.-The following statement is issuedby H. L. Remmel, collector of internal revenue fer the district of Arkansas, Little Rock, Arkansas:
 Merchants, manufacturers and business men generally need experi- ence no difficulty in taking their in ventories for the year 1921 to con- form with the new revenue act. The language of the revenue act of 1918 and the revenue act of 19p1 (Sec. 2O3) relating to inventories are iden- tical:
 That whenever in the opinion of the commissioner the use of the in- Ientories is necessary in order clearly to determine the income of any tax payer, inventories shall be taken by such taxpayer upon such basis as the commissioner, with the approval of the secretary, may prescribe as confirming as nearly as may be to the best accounting practice in the trade or business and as most clearly reflecting the income,'
 Present treasury regulations pro vide that inventories must be valued at either cost of market, whichever is lower in taking their inventories fOr 1920. Thereafter, the regulations pr0vid:,, changes can be made only af- ter permission is obtained from tic cor missioner of internal reveuuc.
 "In the case of merchant 'ccst' means the invoice price less trade CT other discounts, excepting strictly cash discounts approximating a fair rate ct interest, which may be te- due; ed or not at the option of the taxpayer providing consistent course is followed To the net in- voice price should be added the cost of transportation and other necessary charges incurred in acquiring posses sion of the goods.
 Tn the case of manufacturer cost means the cost of raw materials and supplies, expenditures and labor and indirect costs incident to pro- duction, including a reasonable pro- portion of management expenses, but not including any cost of selling or securing return on capital
 '' Market means the current bid price prevailing at the date of the in- ventory for the particular merchan- disc. The burden of proof as to the correctness of the price rests upon the taxpayer in each case. Where no open market quotations are available, the taxpayer must use such evidence of fair market price at the dates nearest the inventory as may be avail able, such as specific transactions or compensation paid for cancellation of contracts or purchase commitments Where, because of abnormal condi. tions the taxpayer has regularly sold merchandise at prices lower than the market bid price, the inventory may be valued at such prices. The cor. rectness of such prices will be deter. mined by reference to the actual sale. of the taxpayer for a reasonable per. iod before and after the date of in. ventory. Prices which vary materi. ally from the actual prices so ascer. tained will not be accepted as refl ct- ing the market.
 "The value of each item in the in- ventory may be measured by cost or market price of each article included in the inventory
 "In the conduct of modern busi. ness, it is of the utmost importance that every business, large or small, whether corporation, partnership or individual, shall maintain an exact record Of receipts and expenses. No special system of accounts is prescri- bed by the bureau of internal revenue but the books should show in detail inventories, purchases, sales, capital investments, depreciation and similar items required in making up income tax returns"
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