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Official form guide
Form 970: Application To Use LIFO Inventory Method
Treasury Internal Revenue Service Form 970 is an Application To Use LIFO Inventory Method, filed with a tax return to elect this method under Section 472; the applicant must agree to necessary adjustments.
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IRS Form 970 - Application To Use LIFO Inventory Method
Treasury Internal Revenue Service Form 970 is an Application To Use LIFO Inventory Method, filed with a tax return to elect this method under Section 472; the applicant must agree to necessary adjustments.
Risk Radar
Scan points- 1Failure to agree to the LIFO adjustment condition on Line 10a disqualifies the applicant from using LIFO.
- 2Filing without entering the exact tax year ending on Line 1 of Part I.
- 3Listing inventory items on Line 1 that are already covered under a previous LIFO election.
- 4Not checking the appropriate method box in Part III, Line 12.
- 5Omitting the required statement describing the applicant’s method of defining “items” in Part IV (Line 13).
Plain English
This form allows a business to officially choose the Last-In, First-Out (LIFO) inventory valuation method for its taxes. By filing Form 970, the company tells the IRS how it values its stock and commits to specific accounting rules regarding that choice. This election must be made with the tax return for the first year of use.
Submission Date
- Filing date: 2020-12-04 22:10:27
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when electing to use the last-in, first-out (LIFO) inventory method under Section 472 of the Internal Revenue Code.
- Do not use Form 970 if you are filing an election statement that contains all the same information requested on Form 970, as you can file the statement instead.
- Check Form 3115 instead when requesting approval to change from the LIFO inventory method.
Form selector
Use this form or another form?
Filing an amended return for a prior year
Must write 'Filed pursuant to section 301.9100-2' at the top of Form 970.
✓ Check that you include the required statement/explanation.
Consolidated group filer
The name and identification number of the parent corporation must be listed on Part I, line 1.
✓ Ensure the Filer's ID matches the corporate filing details.
Changing from LIFO to another method
Use this form to request approval for a change in accounting method away from LIFO.
✓ Verify that you reference the proper section/instructions for Form 3115.
Deadline or filing window
The filing trigger is the first tax year the LIFO method will be used. The deadline is concurrent with that first tax year's income tax return filing. No specific extension period is quoted in the source, but it must accompany the initial filing.
Checklist
What you need before filling it out
Application To Use LIFO Method
Must complete Parts I, II, and VI; Parts III, IV, and V are optional. · Form 970 (p.3)
LIFO Election Year
Enter month, day, year on Part I, line 1. · Form 970 (p.1)
Prior Year Inventory Method
Must identify and describe the method(s) used in a statement attached to Part I, line 2. · Form 970 (p.1)
Beginning/Ending Cost Valuation
Confirm if beginning inventories were valued at cost for the preceding tax year on Part II, line 6a. · Form 970 (p.1)
LIFO Irrevocability
Understand that LIFO is irrevocable unless the IRS allows a change, which can use automatic or non-automatic procedures. · Form 970 (p.3)
Before you submit
- 1Complete all required Parts: I, II, and VI of Form 970.
- 2Attach a statement describing inventory method determination for Part VI, line 22 (if not filled directly).
- 3Verify that the tax year ending date entered on Part I, line 1 is correct.
- 4If answering 'No' to Part II, line 6a, ensure you have addressed lines 6b and 6c completely.
- 5Confirm whether beginning inventories were valued at cost for the preceding year (Part II, line 6a).
- 6Attach a statement describing goods/LIFO methods if answering 'Yes' to Part I, line 3a.
- 7Ensure you have attached a list detailing categories of goods and their unit of measure.
How to file this form
- 1Complete Parts I, II, and VI of Form 970 (and Parts III, IV, and V as applicable).
- 2Attach necessary supporting statements describing inventory methods, prior year usage, or goods covered by the election.
- 3File Form 970 with your tax return for the first tax year you intend to use LIFO.
- 4If filing late, attach Form 970 to an amended return and write 'Filed pursuant to section 301.9100-2' at the top.
- 5Submit the completed form/statement to the IRS at the same address where your original tax return was filed.
Known limitations
- 1The LIFO method adopted via Form 970 is irrevocable unless the IRS allows a change to another inventory method.
- 2If electing LIFO for goods, the applicant must include only those inventory items not already covered under a previous LIFO election when completing Part I, Line 1.
- 3For manufacturers, processors, wholesalers, jobbers, and distributors selecting BLS price indexes, they must use Table 6 of the PPI Detailed Report unless another table is more appropriate.
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is Revision November 2020 (Rev. 11-2020). The form directs users to www.irs.gov/Form970 for the latest information regarding potential developments.
What changed or needs a fresh check
- Edition date — confirm the revision reads November 2020 (Rev. 11-2020).
- OMB Number — confirm the number is 1545-0042.
- Mailing address — not stated in the official source, but attach to your tax return.
- Signature — Not stated in the official source (but signing is required before sending).
Quick Facts
Downloads
After you file
- 1Retain a copy of Form 970 for records.
- 2If filing an amended return to make the election, write “Filed pursuant to section 301.9100-2” at the top of Form 970.
- 3When changing from LIFO, use automatic or non-automatic change procedures and reference Form 3115 for details.
- 4If you filed Form 3115 and received IRS consent to change your inventory valuation method, do not attach a copy of the approval letter but retain it.
Sources
- SRCForm 970 (Rev. November 2020) is the official form number and revision date.
- SRCPart I, Line 1 requires entering the tax year ending month, day, and year for the election.
- SRCThe purpose of Form 970 is to elect the last-in, first-out (LIFO) inventory method under section 472.
- SRCForm 970 must be completed by filling out Parts I, II, and VI, plus Parts III, IV, and V as applicable.
- SRCThe filing deadline for Form 970 is with the tax return for the first year intending to use LIFO.
- SRCIf filing late, attach Form 970 to an amended return within 12 months of the original filing date (Instructions p.3).
- SRCPart I, Line 1 requires listing inventory items not covered by a previous LIFO election (Form p.3).
- SRCFor manufacturers/processors/wholesalers/jobbers/distributors selecting BLS indexes, Table 6 of the PPI Detailed Report is required (Form p.4).
Common confusion points
Who is the 'filer' vs. 'applicant'?
The filer is generally the applicant; however, if Form 970 is filed on behalf of the applicant, the filer's name and ID go on the first line, and the applicant’s details go on the second line.
What do I use for an individual's identification number?
An individual uses their social security number as the identifying number.
Which tax year should I put in Part I, Line 1?
Enter the tax year when the LIFO inventory method will first be used.
When must I file Form 970?
File it with your tax return for the first tax year you intend to use the LIFO method. If filing late, attach it to an amended return within 12 months of the original filing date.
What if my goods are covered by a prior election?
Only list inventory items in Part I, Line 1 that are not already covered under a previous LIFO election.
Do I have to choose between CPI and PPI indexes for retailers?
Retailers can select BLS price indexes from either Table 3 of the CPI Report or from Table 6 (or another more appropriate table) of the PPI Detailed Report.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- If you file without electing LIFO for a tax year, you can make the election by filing an amended return and attaching Form 970.
Questions about IRS Form 970
What is IRS Form 970 used for?
This form allows a business to officially choose the Last-In, First-Out (LIFO) inventory valuation method for its taxes. By filing Form 970, the company tells the IRS how it values its stock and commits to specific accounting rules regarding that choice. This election must be made with the tax return for the first year of use.
Who must file IRS Form 970?
The filer is generally the applicant themselves; however, if filed on behalf of the applicant, the filer's name and identification number are entered on the first line of Form 970.
What information does IRS Form 970 require?
Form 970 collects details in Part I regarding the election (including the tax year ending), Part III detailing specific goods and their unit method, and Part IV describing the dollar-value method used. It also requires information on whether any goods were acquired at below-market prices.
When is IRS Form 970 due?
Form 970 must be filed with the income tax return for the first tax year the applicant intends to use the LIFO method.
Where do I file IRS Form 970?
The form is attached to the relevant tax return; further instructions direct users to www.irs.gov/Form970 for additional information regarding filing.
How do I complete IRS Form 970?
The filer must complete Parts I, II, and VI, and then complete Parts III, IV, and V as applicable. The process begins by stating the election in Part I, followed by detailing inventory methods in Part III (Line 12) and valuation methods in Part IV (Line 15).
What happens if IRS Form 970 is filed incorrectly?
If Form 970 is not filed, the applicant may not be eligible to use the LIFO inventory method, which requires agreeing to make necessary adjustments determined by the IRS upon examination of the income tax return.
Who is the 'filer' vs. 'applicant'?
The filer is generally the applicant; however, if Form 970 is filed on behalf of the applicant, the filer's name and ID go on the first line, and the applicant’s details go on the second line.
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