T.C. Memo. 1996-368
UNITED STATES TAX COURT
E.W. RICHARDSON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 27308-92. Filed August 12, 1996.
During the years in issue, P was the sole
shareholder of I. I was a subch. S corporation that,
among other things, provided management consulting
services and operated an automobile dealership through
one of its divisions. I valued its new car and new
truck inventories on the last-in, first-out (LIFO)
method. During the years in issue, I owned and
maintained an airplane. The airplane was used in
connection with I’s operation of its divisions and in
providing management consulting services.
1. Held: When I began defining its items of
inventory for its new car LIFO pool by model line,
rather than body size, it changed the treatment of a
material item. This change in item was material
because it affected the computation of beginning and
ending inventory. Since I changed the treatment of a
material item used in its overall method of inventory
accounting, it changed its method of accounting. Sec.
446(e), I.R.C.; sec. 1.446-1(e)(2)(ii)(a),(c), Income
Tax Regs.
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