SECTION 1. PURPOSE

This revenue procedure sets forth guidelines for use by taxpayers and Internal Revenue Service personnel in making fair market value determinations for inventory items acquired when a taxpayer purchases the assets of a business for a lump sum or a corporation acquires the stock of another corporation and makes an election pursuant to § 338 of the Internal Revenue Code with respect to the acquisition. The Service invites public comment on issues relating to the inventory valuation methods discussed herein and to whether additional valuation methods are appropriate. This revenue procedure modifies, amplifies, and supersedes Rev. Proc. 77–12, 1977–1 C.B. 569.