Gary L. Pierce - Page 20

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          under section 471 is supported by references in the accounting              
          literature that define merchandise as tangible personal property.           
          Statement 1, A.R.B. No. 43., ch. 4, reprinted in 4 A.I.C.P.A.               
          Professional Standards, AC sec. 5121.03 (CCH 1979); Meigs et al.,           
          Accounting: The Basis for Business Decisions 405 (6th ed. 1984);            
          see also Gertzman, Federal Tax Accounting, sec. 6.05[3][b] (2d              
          ed. 1993).                                                                  
              Petitioner argues that Mary Catherine should be allowed to             
          use inventories because the different lots within the same                  
          development vary only slightly in value and because information             
          regarding land prices has increased substantially since 1928,               
          when we found in Atlantic Coast Realty Co. v. Commissioner, 11              
          B.T.A. at 419-420, that there is “no common market and no record            
          of frequent transactions by reference to which the market price             
          could be readily ascertained.”  We find these arguments                     
          unpersuasive.                                                               
               Petitioner correctly notes, as did the taxpayer in Homes by            
          Ayres v. Commissioner, supra, that the meaning of legal terms is            
          not static.  However, the Commissioner’s position has long been             
          that real property may not be inventoried, see Rev. Rul. 69-536,            
          1969-2 C.B. 109, amplified by Rev. Rul. 86-149, 1986-2 C.B. 67,             
          and we see no current justification in our experience or in the             
          literature to which petitioner has referred us for expanding the            







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