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tax purposes) by using the FIFO method of inventory accounting,
and it chose to apply the LCM basis of valuation.
Consolidated submitted Form 970, Application to Use LIFO
Inventory Method, with its 1980 tax return (1980 Form 970). As
completed by Consolidated, the 1980 Form 970 stated in pertinent
part:
The taxpayer named above [Consolidated] hereby
applies to adopt and use the LIFO inventory method
provided by section 472. This method is to be applied
for the first time as of the close of the taxable year
ending December 31, 1980, to the following specified
goods * * *: Reconditioning costs[3] and new parts
inventories, not including the cost of used core
inventory.
* * * * * * *
4. (a) List goods subject to inventory but which are
not to be inventoried under the LIFO method
Used engines and parts (cores).
* * * * * * *
7. Method used in valuing LIFO inventories
9 Unit method : Dollar-value method
8. (a) If pools are used, list and describe the
contents of each pool
One pool consisting of raw material,
purchased parts and remanufacturing costs.
* * * * * * *
(c) Method used in computing LIFO value of dollar-
value pools
3 As we understand it, the term "reconditioning costs" as
used in the 1980 Form 970 means the costs of direct labor and of
overhead incident to and necessary for the production of
remanufactured automobile parts that Consolidated incurred in
remanufacturing those parts. We shall refer to Consolidated's
reconditioning costs as labor and overhead.
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