-80-
Based on our examination of the entire record in this case,
we reject petitioner's position that Consolidated acquired
customer cores in exchange transactions in which Consolidated's
customers purchased remanufactured automobile parts from it in
exchange for the payment by them of the exchange amounts and
delivery by them of customer cores to Consolidated. On that
record, we find that the substance of the transactions by which
Consolidated acquired customer cores were purchases in which
Consolidated purchased customer cores for the prices that were
shown in the customer core sales invoices under the column headed
"Cores--Price Each".
We shall now address what the cost and the market are for
purposes of section 471 for the customer cores that Consolidated
acquired.27
The Cost for Consolidated's Customer Cores
For purposes of inventory accounting under section 471, the
cost of merchandise purchased is determined under section 1.471-
3, Income Tax Regs. That section provides in pertinent part:
Cost means:
* * * * * * *
27 Assuming arguendo that we were to have found that
Consolidated’s acquisitions of customer cores were exchanges, and
not purchases, our findings below as to the cost and the market
for Consolidated's customer cores for purposes of sec. 471 would
not change.
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