P.R. Laws tit. 21, § 5064
That portion of the property of any manufacturer, merchant, or dealer consisting of merchandise in stock or other items for sale shall be accounted for separately and appraised according to the annual average cost for inventory for the calendar year immediately preceding the date of valuation as it appears on the books of said manufacturer, merchant, or dealer, should they keep an acceptable accounting system which clearly and exactly includes periodic inventories for said year. However, if the balance of the inventories includes the amount paid on account of the sales and use tax, the amount corresponding to the payment of such tax shall be reduced. For valuation purposes, the inventory valuation method known as “LIFO” (last-in/first-out) is not an acceptable accounting method for purposes of this subtitle. If the accounting system does not clearly and exactly reflect the periodic inventories during said year, or in the event that said manufacturer, merchant, or dealer does not keep any accounting system whatsoever, the determination of the annual average inventory of such manufacturer, merchant, or dealer shall be made according to the method which clearly reflects its value and the value of the inventory on the date of the valuation for the computation of the tax as established by this subtitle, in which case, the annual average cost for inventory will represent the cost of replacement or reproduction for the dealer during the year immediately preceding that of the date of appraisal, but not its retail sale price. The above shall be subject to the non-limitation of the ways in which to clearly and exactly determine the taxpayer’s average inventory.
History —Aug. 30, 1991, No. 83, § 3.14; June 30, 2013, No. 40, § 3.