- 20 -
that 4-day bread was sold on Sundays at the usual retail price, not
the quantity that was sold, which necessarily had to be smaller than
the Friday and Saturday bread remaining on the shelves.
Respondent asserts that it is "industry practice" to pull bread
after 3 days and that other grocery chains sell it at a 50- percent
discount on discount racks or in thrift stores. Even though
petitioner chose to do otherwise, respondent argues, the industry
practice establishes the price, and therefore the fair market value,
at which petitioner could have sold the donated bread at the time of
the contribution. Respondent points to section 1.170A-1(c)(3),
Income Tax Regs., which limits the fair market value of contributed
inventory to the amount for which the quantity of property in
question could have been sold at the time of the contribution.
Petitioner disputes respondent's assumption as to what is industry
practice. While respondent's argument has some force on this point,
we do not believe industry practice, such as it is, establishes the
price for which petitioner could have sold the donated bread.
First, the record does not establish when other supermarket
chains pulled their bread for sale at discount. Mr. Lewis testified
that he was uncertain what practice petitioner's competitors
followed regarding the time bread was left on the shelf, although he
believed that during the years in issue one of the competitors,
Alpha Beta, left its bread on its shelves a little longer than did
petitioner. He conceded, however, that petitioner makes an effort
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011