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Respondent contends that the duty of consistency is applicable
herein. Petitioner disagrees.
We conclude that the duty of consistency is not applicable
under the facts herein. There was no erroneous deduction in a
prior year which respondent acquiesced in or relied on to
respondent's detriment. As stated above, petitioner's misreporting
of the treatment of the consigned goods resulted in a wash when
calculating the cost of goods sold deduction such that petitioner
did not receive any benefit and respondent did not suffer any
detriment. Respondent has not suggested any other reason why the
inflated inventory balances would cause respondent to fail to
collect the correct amount of tax. Consequently, we hold that the
duty of consistency is inapplicable.
In sum, we hold that petitioner did not have additional income
of $2,031,778 in its tax year ended June 30, 1991.
Issue 2. Section 6651(a)(1) Addition to Tax
We next determine whether petitioner is liable for an addition
to tax for failure to timely file its 1991 return. Section
6651(a)(1) imposes an addition to tax of 5 percent of the amount of
tax due per month for each month that a tax return is not timely
filed, not to exceed 25 percent. An exception is made for
reasonable cause not due to willful neglect.
One of the requirements of the automatic extension of time to
file a tax return is the proper estimation of the final tax
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