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and Richardson Properties. In 1986, the subsidiaries were
liquidated into Investments and thereafter operated as divisions
of Investments. During the years at issue, Investments, through
its Rich Ford Sales division, operated a franchised Ford Motor
Co. (Ford) automobile and truck dealership in Albuquerque, New
Mexico, and also held franchises for the sale of Daihatsu
automobiles and Daihatsu and Isuzu trucks.
Prior to the taxable year 1974, Investments valued its new
car and new truck inventory on the specific identification, lower
of cost or market, first-in, first-out (FIFO) method. With its
Federal income tax return for the taxable year 1974, Investments
filed Form 970, Application to Use LIFO Inventory Method, the
Commissioner electing to use the last-in, first-out (LIFO) method
of valuing its inventory. Specifically, Investments elected to
use the dollar-value, link-chain, earliest-acquisition method of
inventory valuation with a single LIFO inventory pool for both
its new cars and new trucks.2
Investments’ 1974 Federal corporate income tax return was
audited by the Commissioner. As a result of that audit, the
Commissioner issued a notice of deficiency. The adjustments in
the notice of deficiency were redetermined by this Court in
Richardson Invs., Inc. v. Commissioner, 76 T.C. 736 (1981)
(Richardson I).
2 Although Investments checked the “double-extension method”
block on its Form 970, respondent concedes that petitioner duly
elected the link-chain method of computing the last-in, first-out
(LIFO) value of its inventory.
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