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Congress’ supersession of General Utils. & Operating Co. v.
Helvering, 296 U.S. 200 (1935).
Petitioner maintains that although there are no cases that
apply the aggregate or entity approach to inventory items, the
focus with respect to accounting for inventory is done at the
partnership level. In essence, petitioner asserts that the LIFO
recapture amount under section 1363(d) is a component of a
partnership’s taxable income that must be computed at the
partnership level. Petitioner posits that it would be incongruent
to treat the calculation of the LIFO recapture amount as an item of
income under the entity approach while applying the aggregate
approach to attribute the ownership of inventory to the partners.
Moreover, petitioner argues that section 1363(d)(4)(D) operates to
prevent the inventory of one member of an affiliated group from
being attributed to another member.
To summarize the parties’ positions: respondent maintains
that for purposes of section 1363(d), each of the limited
partnerships (i.e., CP-GMC Motors, Ltd., CH Motors, Ltd., CN
Motors, Ltd., CA Motors, Ltd., CFP Motors, Ltd., and CO Motors,
Ltd.) should be viewed as an aggregation of its partners, and
consequently, petitioner, as a limited partner in each of the
partnerships, is deemed to own a pro rata share of each
partnership’s inventory of automobiles and light trucks.
Conversely, petitioner maintains that each of the limited
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