Page:United States Statutes at Large Volume 100 Part 3.djvu/541

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2349

"(1) IN GENERAL.—The simplified dollar-value method of pricing inventories is a dollar-value method of pricing inventories under which— "(A) the taxpayer maintains a separate inventory pool for items in each major category in the applicable Government price index, and "(B) the adjustment for each such separate pool is based on the change from the preceding taxable year in the component of such index for the major category. "(2) APPLICABLE GOVERNMENT PRICE INDEX.—The term 'applicable Government price index' means— "(A) except as provided in subparagraph (B), the Producer Price Index published by the Bureau of Labor Statistics, or "(B) in the case of a retailer using the retail method, the Consumer Price Index published by the Bureau of Labor Statistics. "(3) MAJOR CATEGORY.—The term 'major category' means— "(A) in the case of the Producer Price Index, any of the 2digit standard industrial classifications in the Producer Prices Data Report, or "(B) in the case of the Consumer Price Index, any of the general expenditure categories in the Consumer Price Index Detailed Report. "(c) ELIGIBLE SMALL BUSINESS.—For purposes of this section, a taxpayer is an eligible small business for any taxable year if the average annual gross receipts of the taxpayer for the 3 preceding taxable years do not exceed $5,000,000. For purposes of the preceding sentence, rules similar to the rules of section 448(c)(3) shall apply. "(d) SPECIAL RULES.—For purposes of this section— "(1) CONTROLLED GROUPS.—

"(A) IN GENERAL.—In the case of a taxpayer which is a member of a controlled group, all persons which are component members of such group shall be treated as 1 taxpayer for purposes of determining the gross receipts of the taxpayer. "(B)

CONTROLLED GROUP

DEFINED.—For

purposes

of

subparagraph (A), persons shall be treated as being component members of a controlled group if such persons would be treated as a single employer under section 52. "(2) ELECTION.—

"(A) IN GENERAL.—The election under this section may be made without the consent of the Secretary. "(B) PERIOD TO WHICH ELECTION APPLIES.—The election

under this section shall apply— "(i) to the taxable year for which it is made, and "(ii) to all subsequent taxable years for which the taxpayer is an eligible small business, unless the taxpayer secures the consent of the Secretary to the revocation of such election. "(3) LIFO METHOD.—The term 'LIFO method' means the method provided by section 472(b). "(4) TRANSITIONAL RULES.—

"(A) IN GENERAL.—In the case of a year of change under this section— "(i) the inventory pools shall—

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