-2-
Respondent determined that C's method of reporting
only raw materials one, labor, and overhead on the LIFO
inventory method (C's LIFO method) does not clearly
reflect income because it is contrary to the require-
ments of sec. 472 and the regulations thereunder and
that therefore C's election to use that method should
be terminated.
Respondent further determined that C's method of
valuing raw materials two did not reflect the proper
amounts for those raw materials under the FIFO
inventory method and the LCM basis of valuation
permitted by sec. 471.
Held: Respondent did not abuse respondent's
discretion in determining that C's LIFO method does not
clearly reflect income because it is contrary to the
requirements of sec. 472 and the regulations thereunder
and that therefore C's election to use that method
should be terminated.
Held, further: Respondent did not abuse
respondent's discretion in determining that C's method
of valuing raw materials two does not clearly reflect
income because it did not reflect the proper amounts
for those raw materials under the FIFO inventory method
and the LCM basis of valuation permitted by sec. 471.
Eric S. Namee and James Scott MacBeth, for petitioner.
Michael J. O'Brien, David G. Hendricks, Karen J. Goheen, and
Jeffery G. Mitchell, for respondent.
CHIECHI, Judge: Respondent determined the following S
corporation adjustments to the ordinary, distributable net, or
taxable income of Consolidated Manufacturing, Inc.
(Consolidated):
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