- 37 -
that, consequently, that method does not clearly reflect income.
See Thor Power Tool Co. v. Commissioner, 439 U.S. 522 (1979).
Petitioner argues that if we were to find, as we have, that
Mountain State Ford's method of using replacement cost in valuing
its parts inventory under the LIFO method does not clearly
reflect income, that method should nonetheless be sustained
because respondent changed that method to an impermissible method
which does not clearly reflect income. In support of his posi-
tion, petitioner cites Dayton Hudson Corp. & Subs. v. Commis-
sioner, 153 F.3d 660, 664 (8th Cir. 1998), revg. T.C. Memo. 1997-
260; Harden v. Commissioner, 223 F.2d at 421; Prabel v. Commis-
sioner, 91 T.C. 1101, 1112 (1988), affd. 882 F.2d 820 (3d Cir.
1989); and Golden Gate Litho v. Commissioner, T.C. Memo. 1998-
184. Relying on those cases, petitioner argues:
The respondent is unwilling to admit the conse-
quences of the adjustment he seeks in this case. The
respondent claims he "has not replaced one impermissi-
ble method with another." The respondent in his brief
refuses to admit that his adjustment changes * * *
[Mountain State Ford's] inventory value from a dollar-
value LIFO value determined using replacement costs as
current-year costs to an inventory value that is in its
entirety equal to current replacement costs. At trial,
however, the respondent admitted that this was the
case. * * * it is internally inconsistent for the
respondent to claim that a LIFO inventory value based
on using replacement costs as current-year costs does
not clearly reflect income while maintaining that the
inventory must be adjusted to a value that is in its
entirety equal to current replacement costs. If the
respondent were correct in his claim that the use of
replacement costs to determine current-year costs under
dollar-value LIFO produces an impermissible inventory
value, then an inventory value based entirely on cur-
rent replacement costs would surely be even more
impermissible.
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