- 35 -
in" a taxpayer's inventory. However, the actual cost reasonably
approximated under the retail method, which is described in
section 1.471-8, Income Tax Regs., satisfies the definition of
the term "cost" in section 1.471-3(d), Income Tax Regs. Conse-
quently, the requirement in section 472(b)(2) that goods for
which a taxpayer elected the LIFO method be inventoried at
"cost", which we have held has the same meaning accorded the term
"cost" in section 1.471-3, Income Tax Regs., is satisfied by a
retailer who elects the dollar-value LIFO method, determines a
reasonable approximation of actual cost under the retail method,
and, inter alia, complies with section 1.472-1(k), Income Tax
Regs., and section 1.472-8(e)(1), Income Tax Regs. We reject
petitioner's argument that the use of the retail method in
conjunction with the dollar-value LIFO method means that Mountain
State Ford's method of using replacement cost under the dollar-
value LIFO method is permitted by section 472 and the regulations
thereunder.17
17 We also reject petitioner's position that the use of the
standard cost method in conjunction with the dollar-value LIFO
method supports his position that Mountain State Ford's method of
using replacement cost under the dollar-value LIFO method is
permitted under sec. 472 and the regulations thereunder. In this
regard, petitioner states:
taxpayers have been consistently permitted to use the
standard cost method under both the full absorption
method and the uniform capitalization method, in con-
junction with the dollar-value LIFO method, despite the
fact that standard costs are merely a predetermined
estimate of the taxpayer's actual costs. Treas. Reg.
�� 1.471-11(d)(3); 1.263A-1(f)(3)(ii)(A).
(continued...)
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