Indiana Administrative Code
Title 50 - DEPARTMENT OF LOCAL GOVERNMENT FINANCE
Article 4.2 - ASSESSMENT OF TANGIBLE PERSONAL PROPERTY
Rule 5 - Valuation of Inventory
Section 5-7 - Alternative method
Universal Citation: 50 IN Admin Code 5-7
Current through September 18, 2024
Authority: 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.
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