-58-
We conclude that petitioner has not shown that respondent
abused respondent’s discretion in determining that Consolidated's
LIFO method is contrary to the requirements of section 472 and
the regulations thereunder and that therefore that method does
not clearly reflect income.
We shall next address the parties' dispute over whether
respondent abused respondent's discretion in terminating
Consolidated's election to use Consolidated's LIFO method because
that method does not clearly reflect income. Petitioner contends
that in the event that the Court were to find that Consolidated's
LIFO method does not clearly reflect income, respondent would not
be permitted to terminate Consolidated's election to use that
method provided that Consolidated agrees to account for its
customer cores under the LIFO inventory method and to make any
necessary adjustments resulting therefrom.20 Petitioner asserts:
20 In conceding that Consolidated would have to make "any
necessary adjustments", we believe that petitioner is
acknowledging that Consolidated would be required to produce the
books and records needed to make such adjustments. However,
petitioner did not produce at trial any of Consolidated's books
and records that would be required to make "any necessary
adjustments". Instead, without even indicating on brief whether
or not Consolidated has the books and records to make "any
necessary adjustments", petitioner takes the position that
respondent must establish that Consolidated does not have such
books and records because whether or not it does is a new matter
on which respondent has the burden of proof. We disagree. It is
petitioner who is claiming that Consolidated should be permitted
to modify its LIFO election to include customer cores provided
that, inter alia, Consolidated establishes that it can, and does,
make "any necessary adjustments". Petitioner has failed to
establish its ability to make such adjustments.
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