-85-
facts and circumstances", section 1.471-4(b), Income Tax Regs.,
and not section 1.471-4(a), Income Tax Regs., applies in
determining the market for Consolidated's customer cores for
purposes of section 471. In support of that contention,
petitioner asserts that, unlike the manner in which prices are
set under normal market conditions with numerous buyers and
sellers operating at arm's length to achieve for themselves the
best economic bargain possible, Consolidated intentionally set
the core amounts, and consequently the customer core purchase
offer amounts and the core credit amounts, at amounts greater
than the core supplier amounts that it was paying its core
suppliers to purchase core supplier cores which had core supplier
guarantees and were of higher quality than customer cores of the
same types.29 As we understand it, petitioner also contends that
section 1.471-4(b), Income Tax Regs., and not section 1.471-4(a),
Income Tax Regs., applies because Consolidated did not purchase
customer cores in an open market.
Respondent contends that the market for Consolidated's
customer cores for purposes of section 471 is determined under
section 1.471-4(a), Income Tax Regs. Respondent further asserts
29 We are not persuaded on the record before us that Bishop
Engine and other core suppliers would not have increased their
prices (i.e., the core supplier amounts) for core supplier cores
in the event that Consolidated and/or other automobile parts
remanufacturers had decided to fill more of their respective core
inventory requirements from those core suppliers, rather than
from those remanufacturers' customers.
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