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dollars, rather than in terms of physical units. Amity Leather
Prods. Co. v. Commissioner, 82 T.C. 726, 732 (1984). To deter-
mine under the dollar-value LIFO method whether there has been an
increase or a decrease in inventory during the year, the ending
inventory is valued in terms of total dollars that are equivalent
in value to the dollars used to value the beginning inventory.
Id.
Respondent argues that the term "cost" in section 472(b)(2)
and the regulation thereunder (viz., section 1.472-2(b), Income
Tax Regs.) means actual cost and that, as required by section
472(b)(2), section 1.472-8(e)(2)(ii), Income Tax Regs., pertain-
ing to the dollar-value LIFO method mandates that the determina-
tion of the current-year cost of items making up a pool be made
on the basis of, or by reference to, actual cost. According to
respondent, Mountain State Ford's method of using replacement
cost, instead of actual cost, in determining the current-year
cost of its parts pool contravenes those requirements of the Code
and regulations, and consequently that method does not clearly
reflect income.
Petitioner concedes that if the Court were to find that
Mountain State Ford's method of using replacement cost were to
contravene the requirements of the provisions of the Code and the
regulations upon which respondent relies, that method would not
clearly reflect income. However, petitioner argues that those
provisions do not require that Mountain State Ford determine the
current-year cost of its parts pool by using actual cost.
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