Consolidated Manufacturing, Inc., M. P. Long Living Trust, Merl Philip Long, Trustee, Tax Matters Person - Page 78

                                        -78-                                          
          instant case, the Court of Appeals for the Tenth Circuit in the             
          Burrell case was not presented with the inventory accounting                
          question under section 471 of the proper amounts at which the               
          taxpayers were required to reflect the cores that they acquired             
          in their inventories, and that Court did not decide that issue.             
          The Court of Appeals in Burrell v. Commissioner, supra at 685,              
          held that the item two charges should have been included in                 
          income at the time the rebuilt engines were sold by the                     
          taxpayers.  In dictum, that court suggested that                            
               there might be some basis for the contention that the                  
               amount thereof [the item two charge] did not accrue                    
               until the expiration of 45 days from the date of the                   
               sale and unless the customer during such period failed                 
               to return the replacement core, and that the value of                  
               the core returned should be accrued on the date of its                 
               return within the 45-day period.  [Id.]                                
          However, the Court of Appeals did not apply the foregoing dictum            
          because "the taxpayers' books were so lacking in completeness,              
          that it would have been impossible to determine the amount the              
          taxpayers should have accrued on that basis."  Id.  Even assuming           
          arguendo that we were to find the above-quoted dictum to be a               
          correct statement of the tax law, we reject petitioner's                    
          contention that that dictum controls our resolution of the                  
          inventory accounting issue involving Consolidated's customer                
          cores that is presented here.                                               
               The facts involved in Burrell v. Commissioner, supra,                  
          although they might appear to be facially similar to the facts              
          involved here, are different from the facts established by the              




Page:  Previous  68  69  70  71  72  73  74  75  76  77  78  79  80  81  82  83  84  85  86  87  Next

Last modified: May 25, 2011