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Cost or market, whichever is lower

This phrase is used only in reference to inventory valuations. Most taxpayers prefer to use cost or market, whichever is lower, as a basis for valuing their inventories since this method affords an opportunity to take advantage of a drop in the market so that profits can be reduced accordingly before disposition of the goods. If cost only is used, a drop in the market cannot affect the income until the merchandise is sold. Either method ((a) cost, or (b) cost or market, whichever is lower)) is acceptable, but either one, once adopted, must be followed unless a permission to change is obtained.