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determining the current-year cost of its parts pool pursuant to
any other proper method under section 1.472-8(e)(2)(ii)(d),
Income Tax Regs.5 (any other proper method), which petitioner
claims Mountain State Ford elected in the Form 970, does not
clearly reflect income. Respondent agrees with petitioner's
framing of the issue relating to the clear-reflection-of-income
standard except that respondent contends that Mountain State Ford
4(...continued)
inventory, respondent's adjustment in the notice to Mountain
State Ford's ordinary income for 1991 would be sustained. Thus,
no issue regarding the price indices calculated by Mountain State
Ford under its link-chain method remains for our decision.
5 Sec. 1.472-8(e)(2), Income Tax Regs., which describes the
double-extension method of computing the LIFO value of a dollar-
value pool, provides in pertinent part:
(ii) The total current-year cost of items making
up a pool may be determined--
(a) By reference to the actual cost of
the goods most recently purchased or
produced;
(b) By reference to the actual cost of
the goods purchased or produced during the
taxable year in the order of acquisition;
(c) By application of an average unit
cost equal to the aggregate cost of all of
the goods purchased or produced throughout
the taxable year divided by the total number
of units so purchased or produced; or
(d) Pursuant to any other proper method
which, in the opinion of the Commissioner,
clearly reflects income.
Although sec. 1.472-8, Income Tax Regs., relating to the dollar-
value LIFO method does not discuss how the link-chain method that
Mountain State Ford elected in the Form 970 is to be applied, the
parties agree that sec. 1.472-8(e)(2)(ii), Income Tax Regs.,
applies to the link-chain method.
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