SECTION 4. SMALL TAXPAYER

EXCEPTION

Pursuant to the discretion under §§ 446(b) and 471, and to simplify bookkeeping requirements for small taxpayers,

the Commissioner, as a matter of administrative convenience, will except taxpayers described in section 3 of this revenue procedure from any requirement to account for inventories under § 471 or to use an accrual method under § 446. A taxpayer described in section 3 that does not want to account for inventories must treat merchandise inventory in the same manner as a material or supply that is not incidental under § 1.162–3. Section 263A does not apply to such merchandise inventory.