SECTION 5. SMALLWARES METHOD

.01 Taxpayers within the scope of this revenue procedure are permitted to account for smallwares in the same manner as materials and supplies that are not incidental under § 1.162–3.

.02 Under § 1.162–3, the costs of materials and supplies that are not incidental are deductible in the year in which the materials and supplies are actually consumed and used in a taxpayer’s business.

.03 For purposes of this revenue procedure, smallwares are consumed and used in a taxpayer’s business, within the meaning of § 1.162–3, in the taxable year in which they are received at the restaurant and are available for use. For purposes of this revenue procedure, “received at the restaurant and available for use” does not include smallwares purchased and stored at a warehouse or facility other than the restaurant where the smallwares will be used.