112 T.C. No. 7
UNITED STATES TAX COURT
MOUNTAIN STATE FORD TRUCK SALES, INC., E. P. O'MEARA, TAX MATTERS
PERSON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16350-95. Filed March 2, 1999.
Company M (M), a heavy truck dealer, purchased
heavy truck parts and accessories (parts) from the
manufacturers of those parts and sold them to its
customers. M, which is required to use inventories
pursuant to sec. 471, I.R.C., made elections under sec.
472, I.R.C., effective as of the close of its taxable
year 1980, to apply the last-in, first-out (LIFO)
method of inventory accounting (LIFO method) with
respect to its parts inventory, to use the dollar-value
LIFO method, to calculate the price index for its parts
pool pursuant to the link-chain method, and to use the
"most recent purchases method" in computing the "total
current-year cost of items making up" its parts pool.
In determining that current-year cost as a first step
in valuing its parts inventory under the dollar-value
LIFO method, M used the respective manufacturers'
prices that were in effect as of the date of its physi-
cal inventory (replacement cost) for the inventoried
parts that it had purchased.
Respondent determined that M's method of using
replacement cost in valuing its parts inventory under
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