SECTION 4. ROLLING-AVERAGE

METHOD SAFE HARBORS

.01 In general . A taxpayer’s use of the rolling-average method it uses for financial accounting purposes to value inventories for federal income tax purposes will be deemed to clearly reflect income if—

(1) The taxpayer recomputes the rolling average cost of an inventory item on one of the following bases:

(A) Each time the taxpayer purchases or produces an additional unit or units of that item; or

(B) On a regular basis but no less frequently than once per month; and

(2) The taxpayer satisfies one of the following conditions:

(A) The variance percentage, as determined under section 4.02 of this revenue procedure, does not exceed one percent; or

(B) The entire inventory of a taxpayer’s trade or business turns at least four times per year, as determined under section 4.03 of this revenue procedure.

26 CFR 601.204: Changes in accounting periods and in methods of accounting. (Also Part I, §§ 471, 472; 1.471–2, 1.471–8, 1.472–1.)

Rev. Proc. 2008–43