Thomas v. Commissioner
United States Tax Court
H owned and operated a book-publishing business founded in 1927 by his parents. In 1946, H became a one-third partner in the business with his parents. In 1968, H became a one-half partner in the business with his mother. In 1975, H became the sole owner of the business. Since the inception of the business, a consistent method of valuing inventory had been used.
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H owned and operated a book-publishing business founded in 1927 by his parents. In 1946, H became a one-third partner in the business with his parents. In 1968, H became a one-half partner in the business with his mother. In 1975, H became the sole owner of the business. Since the inception of the business, a consistent method of valuing inventory had been used. Books were initially placed in inventory at a value of one-fourth of manufacturing cost, and after 2 years, 9 months, books remaining in inventory were written down to zero. Respondent determined that the business' method of inventory…
1Opinion of the Court
Chabot, Judge:
Respondent determined a deficiency in Federal individual income tax against petitioners for 1978 in the amount of $3,302,808. After concessions by petitioners, the issues for decision are as follows:(1) Whether petitioner-husband’s business’ method of valuing inventories of books at one-fourth of manufacturing cost immediately on publication, and at zero after 2 years, 9 months, clearly reflects income.(2) Whether respondent’s revaluation of petitioner-husband’s business’ 1978 inventory constitutes a change in petitioner-husband’s business’ method of accounting, requiring a…
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