SECTION 2. BACKGROUND

.01 Section 472(a) of the Internal Revenue Code generally provides that taxpayers may use the LIFO inventory method if, among other requirements, the change to, and use of, such method is in accordance with such regulations as the Secretary may prescribe as necessary in order that the use of such method may clearly reflect income.

.02 Section 472(b) and § 1.472–1(a) of the Income Tax Regulations require taxpayers using the LIFO inventory method to treat goods remaining on hand at the

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inventories of used automobiles and used light-duty trucks. For purposes of this revenue procedure, used automobiles and used light-duty trucks refer to previously titled vehicles and do not include demonstrator vehicles. Light-duty trucks, which are also referred to as class 1, 2, or 3 trucks, are defined for purposes of this revenue procedure as trucks with a gross vehicle weight of 14,000 pounds or less.