What inventory methods may a taxpayer use? a. If A is a builder of homes, may he treat the homes as inventoried goods? May he elect LIFO? b. If A built ships, may he treat the ships as inventoried goods? May he elect LIFO?

A taxpayer may use different inventory methods such as First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and Average Cost methods. In regards to the first question, if A is a builder of homes, he may treat the homes as inventoried goods and may elect LIFO. However, the use of LIFO may not be available to all taxpayers and certain restrictions may apply. In regards to the second question, if A built ships, he may also treat the ships as inventoried goods and may elect LIFO. However, the eligibility to elect LIFO may depend on the type of taxpayer and the industry in which they operate. For example, while LIFO is commonly used in the auto industry, it may not be allowed for certain types of businesses such as service providers.