-184-
v. Commissioner, 439 U.S. at 531-532; Hamilton Indus. Inc. v.
Commissioner, 97 T.C. at 130.
From 1958 until the date that it was superseded by section
475, section 1.471-5, Income Tax Regs., specifically authorized
dealers in securities to value securities inventories at
(1) cost, (2) market, or (3) lower of cost or market, so long as
the method employed by the dealer for tax purposes was also “the
basis upon which his accounts are kept”. The requirement that a
dealer’s tax accounting method for inventories conform to the
method used to maintain the dealer’s internal accounts and to the
accounting principles of the industry meant, in practice, that
the Commissioner and dealers alike expected that the same
valuations would be employed consistently for tax and for nontax
accounting purposes. In consequence, although many cases involve
disputes over the relevant “market” for purposes of applying, for
example, lower-of-cost-or-market accounting, e.g., Thor Power
Tool Co. v. Commissioner, 439 U.S. 522 (1979), we are unaware of
any decided case in which a taxpayer’s good faith calculations of
the actual fair market values of inventories, employed
consistently for tax and nontax accounting purposes, have been
challenged by the Commissioner.
b. Comprehensive Mark-to-Market Accounting
The same tradition of consistency holds true for
comprehensive mark-to-market accounting outside the context of
Page: Previous 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 NextLast modified: May 25, 2011