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After concessions,1 the issues for decision are: (1)
Whether Richardson Investments, Inc. (Investments), made an
unauthorized change in method of accounting. We hold it did.
(2) Whether Investments’ method of inventory accounting clearly
reflected income. We hold it did not. (3) Whether respondent
abused her discretion in determining that Investments should
define its items of inventory for dollar-value LIFO purposes by
model code. We hold she did not. (4) Whether Investments’
claimed deductions arising from the ownership and operation of an
airplane are allowable. We hold that such deductions are
allowable.
FINDINGS OF FACT
Some of the facts have been stipulated. The stipulated
facts and the accompanying exhibits are incorporated into our
findings by this reference. Petitioner, E.W. Richardson, resided
in Albuquerque, New Mexico, on the date the petition was filed.
During the taxable years 1988 and 1989, petitioner was the
sole shareholder of Investments, a subchapter S corporation.
Investments was incorporated under the laws of the State of New
Mexico on February 21, 1961. Investments elected the status of
an S corporation on January 1, 1986. Prior to 1986, Investments
owned three subsidiaries: Rich Ford Sales, Rich Ford Leasing,
1 Pursuant to a stipulation of agreed adjustments and a
concession on brief by respondent, the parties resolved all but
four of the issues raised by the pleadings. We leave it to the
parties to include these adjustments in their Rule 155
computations.
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