Section 50 IAC 4.2-5-7 - Alternative methodAuthority: IC 6-1.1-31-1
Affected: IC 6-1.1-31
Sec. 7.
(a) As an alternative to any other method described in this article, a manufacturer or processor in this state who is in possession of inventory on the assessment date, which it manufactured or processed at the tax situs for which the return is prepared, may value finished goods and work in process inventory as follows: (1) The cost of raw materials and supplies, which must include the total cost directly or indirectly incurred, including freight, to bring the property to the location where it will be utilized in the manufacturing process. Manufacturers or processors acquiring manufactured products from related entities shall include in the accountability cost the sum of all costs directly or indirectly incurred in bringing the article to its existing condition and location on the assessment date.(2) The cost of all direct production labor.(3) The thirty-five percent (35%) valuation adjustment will not be allowed for work in process and finished goods inventory.(4) Raw materials and supplies inventories will qualify for the thirty-five percent (35%) valuation adjustment, provided that such items have not entered the manufacturing process.(5) Any adjustment taken from inventory valuation must be the same basis on which it was included in the tax return.(6) This election must be applied to all locations within this state, except as noted in subdivision (7). If this alternative method is elected, the taxpayer may not use any other method to value inventory for any subsequent year unless a written request has been approved by the department prior to the due date of the return.(7) This election is available only for manufacturers' or processors' finished goods or work in process inventories to the extent that the goods have not entered another level of trade.(b) Computations of the adjustments outlined in this section are required to be attached to the tax return or computed on Form 106, or both, provided by the department pursuant to 50 IAC 4.2-2-9.Department of Local Government Finance; 50 IAC 4.2-5-7; filed Dec 7, 1988, 9:35 a.m.: 12 IR 853, eff Mar 1, 1989; reinstated by IC 6-1.1-3-22, eff Jul 1, 2003Filed 11/2/2020, 9:34 a.m.: 20201202-IR-050190636FRA