Common use of Alternative rule Clause in Contracts

Alternative rule. If the partner- ship is not otherwise required to deter- mine the inventory amount of the in- ventory using the LIFO method (the LIFO value) on the recapture date, the partnership may determine the lookthrough LIFO recapture amount as though the FIFO and LIFO values of the inventory on the recapture date equaled the FIFO and LIFO values of the opening inventory for the partner- ship’s taxable year that includes the recapture date. For this purpose, the opening inventory includes inventory contributed by a partner to the part- nership on or before the recapture date and excludes inventory distributed by the partnership to a partner on or be- fore the recapture date. A partnership that applies the alternative method of this paragraph (c)(4)(iii) to calculate the lookthrough LIFO recapture amount must take into account any adjustments to the partnership’s basis in its LIFO inventory that result from transactions occurring after the start of the partnership’s taxable year and before the end of the recapture date. For example, the lookthrough LIFO re- capture amount must be adjusted to take into account any adjustments to the basis of LIFO inventory during that period under sections 734(b), 737(c), or 751(b).