-62-
quently, section 1.472-3(c), Income Tax Regs., is not apposite
here.
The pertinent authority governing disposition of the issue
regarding respondent's termination of Consolidated's LIFO
election is section 446(b) and section 1.472-3(d), Income Tax
Regs. Section 446(b) provides:
(b) Exceptions.--If no method of accounting has
been regularly used by the taxpayer, or if the method
used does not clearly reflect income, the computation
of taxable income shall be made under such method as,
in the opinion of the Secretary, does clearly reflect
income.
The foregoing section permits respondent to terminate a
taxpayer's method of accounting that does not clearly reflect
income (here, Consolidated's LIFO method) and to require the
taxpayer to use a method (here, the FIFO inventory method) that
does clearly reflect income.
Section 1.472-3(d), Income Tax Regs., provides:
(d) Whether or not the taxpayer's application for
the adoption and use of the LIFO inventory method
should be approved, and whether or not such method,
once adopted may be continued, and the propriety of all
computations incidental to the use of such method, will
be determined by the Commissioner in connection with
the examination of the taxpayer's income tax returns.
Under the foregoing regulation, it is within respondent's
discretion to determine whether or not a "taxpayer's application
for the adoption and use of the LIFO inventory method should be
approved * * * and * * * continued".
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