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Income Tax Regs. That regulation requires such cost to be
determined by "reference to the actual cost of the goods most
recently purchased". Sec. 1.472-8(e)(2)(ii)(a), Income Tax Regs.
Mountain State Ford did not request, and did not receive, the
permission of the Commissioner to use a method different from the
most recent purchases method that it elected in the Form 970.
See sec. 472(e). We conclude that Mountain State Ford was
precluded in determining the current-year cost of its parts pool
from using a method other than the most recent purchases method
which it elected in the Form 970 that it filed with its 1980
return.
Even if, as petitioner contends, Mountain State Ford had
elected in the Form 970 to use any other proper method under
section 1.472-8(e)(2)(ii)(d), Income Tax Regs., that method must
be a proper method and must, in the opinion of the Commissioner,
clearly reflect income. Respondent determined that Mountain
State Ford's method of using replacement cost in determining the
current-year cost of its parts pool was not a proper method and
does not clearly reflect income because section 472(b)(2) re-
quires that Mountain State Ford calculate such current-year cost
by using actual cost, which in this case is the invoice prices.
Petitioner contends that respondent abused respondent's discre-
tion in making that determination. Petitioner asserts:
An examination of * * * [section 1.472-8(e)(2)(ii),
Income Tax Regs.] indicates that whereas the earliest
and latest acquisitions cost methods (Treas. Reg. ��
1.472-8(e)(2)(ii)(a) & (b)) are described in terms of
actual cost, this term is not used in describing either
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