Dow A. and Sandra E. Huffman, et al. - Page 19

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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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