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which it elected the link-chain method (the election year) and
continuing thereafter, without exception, until the actions of
respondent that led to this litigation (together, and without
distinguishing among members, the election and following years).
The parties have stipulated that, for each of the election and
following years, the accountant omitted a computational step
required by section 1.472-8, Income Tax Regs., which addresses the
dollar-value method of pricing LIFO inventories. Pursuant to his
method, the accountant first determined the items in each dollar-
value pool at the end of each year. He then determined the
current-year cost of each pool and divided that current-year cost
by a cumulative index to determine the base-year cost of the pool.
He compared the base-year cost so determined to the base-year cost
of the pool as of the beginning of the year. When the end-of-the-
year base-year cost exceeded the beginning-of-the-year base-year
cost, the accountant determined that there had been an increment to
the pool, but he did not multiply the increment by the cumulative
index (he failed to “index” the increment) to determine a LIFO
value for the increment (sometimes, the accountant’s error). He
assumed the LIFO value of the increment to be the difference
between the end-of-the-year and beginning-of-the-year base-cost of
the pool. That assumption led him to conclude that the yearend
LIFO value of each pool was its value determined at base-year
costs.
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