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In court, the company argued that its deduction for loss should be allowed for tax purposes because it was permitted for accounting purposes. But the Court upheld the IRS regulations, saying, "There is no presumption that an inventory practice conformable to
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manufactured equipment using multiple parts that it produced. It capitalized the costs of these parts when produced. When it had inventories of parts in excess of production needs, the company's accounting practice was to
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Commissioner did not abuse his discretion in determining that the write-down of "excess" inventory failed to reflect petitioner's 1964 income clearly, since the write-down was plainly inconsistent with the governing
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249:' is valid for tax purposes. Such a presumption is insupportable in light of the statute, this Court's past decisions, and the differing objectives of tax and financial accounting."
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in order to realize a taxable loss. These books would previously have been kept in stock but written down to reflect the fact that not all of them were expected to sell.
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those inventories, taking a loss based on management judgment.
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Thor Power Tool
Company v. Commissioner of Internal Revenue
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Thor Power Tool
Company v. Commissioner of Internal Revenue
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United States
Supreme Court cases of the Burger Court
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