Cost or Market, Whichever is Lower

Cost or Market, Whichever is Lower

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.
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If not, retirement portfolios should be valued like other inventories of things held for resale -- at cost or market, whichever is lower.