Rev. Rul. 67-103

A corporation has been consistently computing its inventories in a manner which does not clearly reflect its income. The corporation's assets were acquired by another corporation in a transaction described in section 381 of the Internal Revenue Code of 1954. The Commissioner of Internal Revenue changed the closing inventory on the last return of the corporation whose assets were transferred.

Held , the adjustment to the closing inventory is a change in method of accounting not `initiated by the taxpayer' and is therefore subject to the provisions of section 481 of the Code. The revised basis of the acquired corporation's closing inventory and the net amount of the adjustments under section 481 of the Code not taken into account by the acquired corporation are carried over and taken into account by the acquiring corporation. Compare section 381(c)(21) of the Code, which is not directly applicable in the circumstances of this case because no pre-1954 Code balance is involved.