Consolidated Manufacturing, Inc. v. Commissioner

EBEL, Circuit Judge.

This case involves financial accounting issues in the context of income taxation. Consolidated Manufacturing purchases used car parts, called “cores,” rebuilds the cores with new components, and then sells them. Consolidated uses a pricing system that encourages its customers for the rebuilt products to send a replacement core back to it. In this way, Consolidated ensures a continuous supply of its primary raw material — the cores. The price that the company agrees to pay its customers for such replacement cores is called the “core amount” (referred to herein as “core…