-59-
It would be unreasonable, unduly punitive, and
constitute an abuse of her discretion for Respondent to
terminate * * * [Consolidated's] LIFO election because
Petitioner has sought judicial review of her
determination that it is essential to a clear
reflection of income that its [customer] core inventory
be included in the LIFO election.
In support of its position, petitioner cites, inter alia, Rev.
Proc. 79-23, 1979-1 C.B. 564, and section 1.472-3(c), Income Tax
Regs.21
We first turn to Rev. Proc. 79-23, supra, on which
petitioner relies. Petitioner contends that Rev. Proc. 79-23,
supra, "provides that a termination of a taxpayer's LIFO election
may be warranted only where one of four specified circumstances
exists". Petitioner maintains that the present case does not
involve any of those four situations.22 We note initially that
21 Petitioner also cites Tech. Adv. Mem. 79-47-001 (July
25, 1979) to show "that Respondent has previously recognized that
a taxpayer may contest her determination regarding LIFO inventory
matters without the threat of having its LIFO election
terminated." Petitioner's reliance on Tech. Adv. Mem. 79-47-001
is misplaced. Tech. Adv. Mem. 79-47-001, which has no
precedential value, sec. 6110(j)(3), involved an adjustment
proposed by the District Director pursuant to sec. 1.472-4,
Income Tax Regs., to "perfect the [taxpayer's] LIFO election",
and not a termination of that election. To the extent that Tech.
Adv. Mem. 79-47-001 may be read to suggest that respondent does
not have the authority in this case to terminate Consolidated's
election to use Consolidated's LIFO method, such a reading is
wrong. See sec. 446(b); sec. 1.472-3(d), Income Tax Regs.
22 Petitioner further contends that the exclusion of
customer cores from Consolidated's LIFO pools fits within one or
both of the following situations described in sec. 3.02(b) and
(d) of Rev. Proc. 79-23, 1979-1 C.B. 564, 565, as to which
respondent has indicated termination of a LIFO election is not
warranted:
(continued...)
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