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happens if inventory prices decrease; or (5) whether Cost Less
used first in first out, or last in first out, or any other
method.
Petitioners contend that respondent conceded that they
overstated the inventory of Cost Less. We disagree. Respondent
agrees that petitioners' inventory records are not accurate but
not that Cost Less overstated its inventory.
Petitioners contend that we must allow Cost Less to adjust
its inventory, citing Western Wheeled Scraper Co. v.
Commissioner, 14 B.T.A. 496, 504 (1928). Petitioners' reliance
on Western Wheeled Scraper Co. v. Commissioner, supra, is
misplaced. That case holds that a taxpayer may adjust its
inventory to correct clear errors. In that case, the Board of
Tax Appeals allowed the taxpayer to adjust inventory for specific
items and amounts which the taxpayer showed were duplicated in
inventory but not for other, vague items. See id. at 504-505.
Cost Less may not reduce its ending inventory without
showing the amount of the adjustment that is needed to clearly
reflect income. We conclude that Cost Less may not reduce
inventory by $10,000 for any of the years in issue.
C. Deduction for Van Use
Petitioner used his 1979 van for business from the early
1980's through the years in issue. Petitioners contend that Cost
Less may deduct an amount based on the mileage that petitioner
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