Taxpayers can choose to value each item of stock on

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Taxpayers can choose to value each item of stock on hand at the end of each  income year based on: Cost Market selling value Replacement value Input tax credits are ignored in calculating cost of trading stock Varying valuation methods Varying valuation methods Taxpayers can use different valuation methods for different items of stock Taxpayers can switch valuation methods from year to year   The closing value of the stock in Year 1 will automatically become the opening  value of the stock Year 2 Special rules Special rules Special rules apply where: Trading stock is not acquired at “arm’s length” and for more than its market  value An item that is not originally held as trading stock becomes trading stock  Trading stock is disposed of outside the ordinary course of business A fractional disposal of trading stock takes place The owner of trading stock dies An item is no longer held as trading stock but the taxpayer still owns it Small business entity Small business entity     concession concession Small business entities only need to account for changes in the value of their 
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trading stock where they reasonably estimate that the difference between the  opening and closing values exceed $5,000
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