- 34 -
valuing its parts inventory under the dollar-value LIFO method is
proper, petitioner asserts:
ever since this Court's decision in Hutzler Brothers v.
Commissioner, 8 T.C. 14 (1947), taxpayers have been
permitted to use the retail method in conjunction with
the dollar-value LIFO method despite the fact that
under the retail method a taxpayer does not compute the
actual cost of the items in its inventories under any
of the three inventory ordering conventions.
We turn first to petitioner's suggestion in the foregoing
excerpt from his brief that respondent is arguing in this case
that it is necessary under the dollar-value, link-chain LIFO
method which Mountain State Ford elected to determine the actual
cost of each unit inventoried. We do not understand respondent
to be taking that position. To the contrary, as section 1.472-
8(e)(2)(ii), Income Tax Regs., makes clear, the requirement in
section 472(b)(2) that goods for which a taxpayer elected the
LIFO method be inventoried "at" cost does not mean that, in
determining the current-year cost of items making up a pool, it
is necessary to determine the actual cost of each unit invento-
ried.16
Turning now to petitioner's argument about the retail
method, petitioner is correct that the retail method is permitted
to be used in conjunction with the dollar-value LIFO method,
Hutzler Bros. Co. v. Commissioner, 8 T.C. 14 (1947); sec. 1.472-
1(k), Income Tax Regs.; sec. 1.472-8(e)(1), Income Tax Regs., and
that that method "does not compute the actual cost of the items
16 Nor is it necessary to do so under the specific-goods
LIFO method. See sec. 1.472-2(d), Income Tax Regs.
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011