What COST OR MARKET, WHICHEVER IS LOWER means: This phrase is used in reference to inventory valuations. Most taxpayers prefer to use "cost or market, whichever is lower" as a basis for valuing their inventories because this method affords an opportunity to take advantage of a drop in the market so that profits can be reduced accordingly before disposition of the goods. If "cost" only is used, a drop in the market cannot affect the income until the merchandise is sold. Either method is acceptable, but the one adopted must be followed unless the IRS grants permission for a change.
- Definition Capital Asset:
- Dictionary all assets are capital assets except those specifically excluded by the tax Code. Major categories of noncapital assets include property held for resale in the normal course of business (inventory cost or market, whichever is lower definition.
- Definition Constructive Receipt:
- Dictionary taxpayer is taxed on income only as it is received. But if the income was unreservedly subject to his or her demand and he or she could have received it but chose not to do so, it is regarded as cost or market, whichever is lower explain.
- Definition Cafeteria Plan:
- Dictionary employer offers a choice of salary or specified nontaxable fringe benefits from which participating employees may select. The plan may be funded with employer contributions, employee contributions cost or market, whichever is lower what is.
- Definition Cost Method Of Inventory Valuation:
- Dictionary Valuing inventory purchased during the year at cost; that is, the invoice price less any discounts plus transportation or other costs incurred in acquiring the merchandise cost or market, whichever is lower meaning.
How works Cost or Market, Whichever Is meaning in Tax definitions C .
