- 23 -
shown on those returns due to the accountant’s error. Respondent
revalued the members’ inventories for the election and following
years (beginning for Nissan and Volkswagen with 1979 and for Dodge
and Chrysler with 1990 and ending for all four corporations with
1999). Those revaluations caused respondent to make adjustments to
the members’ gross incomes for those years. For each inventory
pool, for each year, respondent proceeded as follows: He first
calculated the correct yearend LIFO inventory value. Based on the
correct yearend LIFO inventory value, he next calculated the
correct yearend LIFO reserve. He then subtracted the correct
yearend LIFO reserve from the yearend LIFO reserve calculated by
the accountant. The difference, generally a positive number (the
adjustment to ending inventory), is the amount that he calculated
would have to be added to or subtracted from (generally added to)
the yearend LIFO inventory value computed by the accountant to
conform that value with the correct yearend LIFO value. To
calculate any necessary adjustment to gross income for the year,
respondent subtracted from the adjustment to ending inventory the
similarly calculated adjustment that he had made for the prior year
(except, of course, for the first year he commenced making
adjustments). The difference was usually positive and would, thus,
increase gross income (by, in effect, decreasing the cost of goods
sold from the pool).
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011