-88-
record, we find that section 1.471-4(a), Income Tax Regs., and
not section 1.471-4(b), Income Tax Regs., applies in determining
the market for Consolidated's customer cores for purposes of
section 471. We further find that the market under section
1.471-4(a), Income Tax Regs., is the replacement cost and that
the replacement cost for each of the customer cores of
Consolidated that were included in its inventories at the end of
each of the years at issue is the core credit amount for a
customer core of the same type that was prevailing at the end of
each of those years.
Based on our examination of the entire record in this case,
we find that petitioner has not shown that respondent abused
respondent's discretion in determining that Consolidated's FIFO-
LCM method does not clearly reflect income because that method
did not reflect the proper amounts for customer cores.
To reflect the foregoing and the concession of petitioner
for 1990,
Decision will be entered
for respondent.
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