The opinion
MAURICE MALTER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
Malter v. Commissioner
Docket No. 14502.
United States Board of Tax Appeals
14 B.T.A. 1208 ; 1929 BTA LEXIS 2975 ;
January 11, 1929 , Promulgated
*2975 Held, that the petitioner is entitled to inventory his goods on hand at the end of 1920 on the basis of cost or market, whichever was less, although at the beginning of the year he inventoried them at cost.
Nicholas J. Pritzker, Esq., for the petitioner.
J. A. O'Callaghan, Esq., for the respondent.
TRAMMELL
*1208 This is a proceeding for the redetermination of a deficiency in income and profits taxes for 1920 in the amount of $1,334.48.
The error assigned is the action of the respondent in refusing to permit the petitioner to value his closing inventory for 1920 on the basis of market which was less than cost.
FINDINGS OF FACT.
The petitioner is a resident of Chicago, Ill., and is engaged in the retail fur business. He had a stock of furs on hand at the beginning and at the end of 1920. At the beginning of that year he inventoried his goods at cost. At the close of the year he inventoried them at market. The market was less than cost. The cost of the goods was $6,233.05, while the market price at the close of 1920 was $2,832.
The respondent refused to accept the inventory upon the basis of cost or market, whichever is less, *2976 but determined the inventory on the basis of cost.
OPINION.
TRAMMELL: The question here presented is whether the petitioner should be permitted to inventory its goods on hand at the end of 1920 on the basis of cost or market, whichever is less, or should be restricted to the cost basis at the end of the year since he used the cost basis at the beginning of the year.
Inventories prior to December 31, 1920, were taken at cost. In the case of , we held that in 1920, pursuant to the regulations of the Treasury Department, a taxpayer was permitted to change his basis of inventory in that year to the basis of cost or market, whichever is less. The market being less than cost, we think that the petitioner should be permitted to use the market.
On the question of fact as to the cost and market of the goods in question, we think the evidence clearly supports the petitioner's contention and our findings of fact.
Judgment will be entered under Rule 50.