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Investments never defined its inventory units for its new car
pool by model code. The weight of the evidence in this case
suggests that Investments never defnied its inventory units for
its new car pool by model code, and we so find.
2. Unauthorized Change in Taxable Year 1981
Respondent determined that Investments made an unauthorized
change in the treatment of a material item when it changed the
definition of its inventory units for its new car pool from body
size to model line in taxable year 1981. Petitioner asserts that
Investments’ change in definition of its inventory units was not
a change in the treatment of a material item used in its dollar-
value LIFO method of inventory accounting.13
Petitioner initially argues that Investments did not change
the treatment of an item. Essentially, petitioner argues that
the definition of the units used to compute beginning of the year
value of ending inventory did not serve to define its items of
inventory for dollar-value LIFO purposes. Respondent disagrees.
Under the dual-index, link-chain method, beginning of the
year value of ending inventory serves as the denominator in both
the annual deflator index computation and the layer-valuation
13 Petitioner does not argue that Investments could change its
method of accounting without respondent's consent, as did the
taxpayers in Foley v. Commissioner,56 T.C. 765 (1971) and Silver
Queen Motel v. Commissioner, 55 T.C. 1101 (1971). In any event,
we would find these cases distinguishable, as Investments
regularly used a body size definition of item prior to 1981. Cf.
Foley v. Commissioner, supra at 769-770; Silver Queen Motel v.
Commissioner, supra at 1105; Convergent Technologies, Inc. v.
Commissioner, T.C. Memo. 1995-320.
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