Page:United States Statutes at Large Volume 53 Part 1.djvu/23

 (8) MISCELLANEOUS rrEMs. - T he following items, to the extent provided in section 116: Earned income from sources without the United States; Salaries of certain Territorial employees; The income of foreign governments; Income of States, municipalities, and other political subdivi- sions; Receipts of shipowners' mutual protection and indemnity associations; Dividends from China Trade Act corporations; Compensation of employees of foreign governments. (c) INvENTroREs. -W henever in the opinion of the Commissioner the use of inventories is necessary in order clearly to determine the income of any taxpayer, inventories shall be taken by such taxpayer upon such basis as the Commissioner, with the approval of the Secretary, may prescribe as conforming as nearly as may be to the best accounting practice in the trade or business and as most clearly reflecting the income. (d) INVENTORIES IN CERTAIN INDUSTRIES.- (1) PRODUCERS AND PROCESSORS OF CERTAIN NON-FERROUS METALS.-A taxpayer shall be entitled to elect the method of tak- ing inventories provided in paragraph (2) if his principal business is- (A) Smelting non-ferrous ores or concentrates, or refining non- ferrous metals, or both; or (B) Producing brass, copper products, or brass products, or any one or more of them, not further advanced than rods, sheets, tubes, bars, plates, or strips. (2) INVENTORIES OF RAW MATERIALS.-A taxpayer entitled to elect, and who has so elected, shall, in taking his inventory as of the close of any taxable year of raw materials which are- (A) used in a business described in paragraph (1); and (B) not yet included in goods in process or finished goods; and C) so intermingled that they cannot be identified with spe- cific invoices; treat such raw materials remaining on hand as being: First, those included in the inventory as of the beginning of the taxable year (in the order of acquisition) to the extent thereof, and second, those acquired in the taxable year, in the order of acquisition. (3) TANNERS. -A taxpayer whose principal business is tanning hides or skins, or both, shall be entitled to elect (with respect to any taxable year) the method provided in paragraph (2) as to the raw materials (including those included in goods in process and in finished goods) in the business of tanning hides, or skins, or both, if so intermingled that they cannot be identified with specific invoices. (4) INVENTORIES AT COST. - In the case of the application of the provisions of paragraph (2) or (3) all inventories of such mate- rials shall be taken at cost, including the inventory as of the close of the preceding taxable year even though such preceding taxable year began prior to January 1, 1939. (5) ELECTION OF METHOD. -T he method provided in paragraph (2) or (3) shall not be applied unless the taxpayer, at or before the filing of his return for the preceding taxable year, has filed with the Commissioner his election to have it apply. (6) REGULATIONS AS TO CHANGE.- The change to such method shall be made in accordance with such regulations as the Commis- sioner, with the approval of the Secretary, may prescribe as neces- sary to prevent the avoidance of tax. (7) CHANGE TO DIFFERENT METHoD. - An election made under this subsection shall be irrevocable and the method so elected shall be applied in all subsequent taxable years notwithstanding any change INCOME TAX 11

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