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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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