Mountain State Ford Truck Sales, Inc., E.P. O'Meara, Tax Matters Person - Page 39




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               We do not understand the statements of respondent's counsel            
          during his opening statement at trial to be a concession by                 
          respondent that respondent placed Mountain State Ford on a non-             
          LIFO method that utilizes replacement cost, and we reject peti-             
          tioner's contention to the contrary.  Even if respondent's                  
          counsel had made such a concession during his opening statement             
          at trial, we would not consider it to be a concession that binds            
          respondent.  That is because, inter alia, any such concession               
          would have been contrary to respondent's position as set forth in           
          paragraph 51 of the stipulation of facts, which was made part of            
          the record in this case immediately before the Court allowed                
          counsel for the parties to make opening statements.  The position           
          of respondent in paragraph 51 of the stipulation of facts is                
          totally consistent with the notice.  In the notice, respondent              
          did not terminate Mountain State Ford's elections to value its              
          parts inventory under the dollar-value, link-chain LIFO method              
          and to use the most recent purchases method in order to determine           
          the current-year cost of its parts pool.18  Mountain State Ford             
          remains on those methods and cannot account for its parts inven-            
          tory on any other methods without first receiving permission from           

               18  Pursuant to sec. 3.01(c), Rev. Proc. 79-23, 1979-1 C.B.            
          564, "Failure by the taxpayer to value its LIFO inventory at cost           
          for Federal income tax purposes, for the year preceding the LIFO            
          election, the year of the LIFO election, and all subsequent                 
          taxable years" may warrant the termination of that taxpayer's               
          LIFO election.  However, such termination is within the discre-             
          tion of respondent and is not mandatory.  See Consolidated                  
          Manufacturing, Inc. v. Commissioner, 111 T.C. 1, 38 (1998).  In             
          the present case, respondent chose not to exercise that discre-             
          tion and did not terminate Mountain State Ford's LIFO election.             

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