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Prods. Co. v. Commissioner, supra at 739-740; Wendle Ford Sales,
Inc. v. Commissioner, supra at 459.
Petitioner next argues that, even if a change in the
treatment of an item is found to have occurred in taxable year
1981, the change does not rise to the level of a change in method
of accounting because such change was merely a change in
valuation. In support of this argument, petitioner relies on the
regulatory exception for a change in underlying facts, section
1.446-1(e)(2)(ii)(b), Income Tax Regs, and the case of Baltimore
& O.R.R. v. United States, 221 Ct. Cl. 16, 603 F.2d 165 (1979).
In Baltimore & O.R.R., the court found that the taxpayer had not
changed its method of accounting by changing to a valuation
formula that more accurately estimated salvage value, finding
that such a change was merely a change in underlying fact. Id.
at 168-169.
The objective of inventory accounting is to value
inventories. All-Steel Equip. Inc. v. Commissioner, 54 T.C.
1749, 1757 (1970), affd. in part and revd. in part 467 F.2d 1184
(7th Cir. 1972); see Fox Chevrolet, Inc. v. Commissioner, 76 T.C.
at 722. Accordingly, any change in inventory accounting can be
characterized as a change in valuation. Thus, under petitioner’s
argument, any change in inventory accounting could be
characterized as a change in underlying fact and, therefore, not
a change in method of accounting. We reject petitioner’s
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