Primo Pants Co. v. Commissioner
United States Tax Court
Petitioner was a manufacturer of men's pants, whose inventory was purportedly valued at the lower of cost or market. For tax purposes, finished pants were consistently valued at a percentage of selling price. Materials and work in process were valued at a percentage of cost. Petitioner did not allocate any amount for direct labor and factory overhead in valuing its manufactured inventory.
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Petitioner was a manufacturer of men's pants, whose inventory was purportedly valued at the lower of cost or market. For tax purposes, finished pants were consistently valued at a percentage of selling price. Materials and work in process were valued at a percentage of cost. Petitioner did not allocate any amount for direct labor and factory overhead in valuing its manufactured inventory. Held, petitioner's method of valuing inventory did not clearly reflect income, and respondent properly revalued the inventory to clearly reflect income under sec. 446(b) and sec. 471, I.R.C. 1954. Held,…
1Opinion of the Court
Parker, Judge:
Respondent determined deficiencies in petitioner’s Federal income taxes for the fiscal years ending November 30, 1973, November 30, 1974, and November 30, 1975, in the amounts of $119,118, $59,369, and $33,566, respectively. After concessions by the parties, the issue for decision is whether there has been a change in petitioner’s method of accounting.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference.
Petitioner Primo Pants Co. (Primo) is a corporation with its…
2Cases cited15 opinions
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