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(2) Even though we have held that respondent did not abuse
respondent's discretion in making the determination described
above, did respondent abuse respondent's discretion by placing
Mountain State Ford on an impermissible method of inventory
accounting when respondent adjusted Mountain State Ford's ordi-
nary income for 1991 to include the amount of the so-called LIFO
reserve that it had calculated during the period 1980 through
1991? We hold that respondent did not.
FINDINGS OF FACT1
Some of the facts have been stipulated and are so found.
Mountain State Ford, which was incorporated in Delaware in
1968 and has been an S corporation since its taxable year 1987,
had its principal place of business in Denver, Colorado, at the
time the petition was filed. E. P. O'Meara (Mr. O'Meara), who
worked in the automobile and truck dealer industry on a part-time
basis since late 1939 and on a full-time basis since January
1947, is Mountain State Ford's tax matters person.
In January 1968, Mr. O'Meara started operating Mountain
State Ford as a heavy truck dealer under a management agreement
with Ford Motor Company (Ford), which owned all of its stock. As
a heavy truck dealer for Ford, Mountain State Ford carried, and
maintained an inventory of, different types of heavy truck parts
1 Unless otherwise indicated, our Findings of Fact and
Opinion pertain to all periods since the incorporation of
Mountain State Ford to the trial in this case; all section
references are to the Internal Revenue Code (Code) in effect for
the year at issue; and all Rule references are to the Tax Court
Rules of Practice and Procedure.
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