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in its unprocessed cores raw material inventory and its goods in
process inventory at scrap value. On the record before us, we
find that petitioner has not met its burden of establishing that
Consolidated's FIFO-LCM method conforms to GAAP or that that
method otherwise satisfies the requirement in section 471 that it
conform "as nearly as may be to the best accounting practice in
the trade or business".
We shall now consider whether Consolidated's FIFO-LCM method
satisfies the requirement under section 471 that that method
clearly reflect income. In support of that position, petitioner
contends that Consolidated obtained customer cores in exchange,
and not purchase, transactions and that therefore the cost and
the market for those cores for purposes of section 471 are to be
determined on the basis of the respective fair market values of
those cores. According to petitioner, those values were either
the salvage yard cost for non-bin salvage yard cores or the scrap
value for bin salvage yard cores that did not pass inspection at
Bishop Engine's place of business.24
24 Petitioner asserts on brief:
[T]he price paid [the salvage yard cost] by core
suppliers to purchase cores from salvage yards on an
individual basis [non-bin salvage yard cores] should be
determinative of the actual value of cores received by
* * * Consolidated from its customers. In this regard,
at trial Mr. Bishop, the President of one of the
largest core suppliers in the country, testified that
the cores received by remanufacturers from their
customers are the cores [bin salvage yard cores which
(continued...)
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