
    Appeal of JAMES H. BUNCE CO.
    Docket No. 319.
    On the evidence, held, that the taxpayer did not take its inventory at December 31, 1918, on a basis of cost or market whichever is lower.
    Submitted January 13, 1925;
    decided March 18, 1925.
    
      Mr. James H. Bunee, president of taxpayer corporation, for the taxpayer.
    
      W. F. Gibbs, Esq., for the Commissioner.
    Before Ivins, Kobneb, and Maequette.
    FINDINGS OF FACT.
    The taxpayer is a Connecticut corporation operating a general department store in Middletown, Conn. It took its closing inventory for the calendar year 1911 on a cost basis. It took its closing inventory for the calendar year 1918 upon a different basis, as follows: In 20 of the 29 departments of the store inventories were taken at retail selling prices and reduced by percentages varying from 45 to 60 per cent. In the inventory sheets the total of selling prices was designated “retail,” and the reduced totals were designated “market.” These “market” figures were used in the inventory, no determinations of actual cost being made for any of these 20 departments, no comparisons of cost and market, either with respect to particular items, groups, or totals of departments being made.
    In the other 9 departments of the store goods were inventoried at cost, no comparison being made with market value. In some of these departments the inventory was taken at cost, and in others 90 per cent of cost was regarded as “market.”
    The Commissioner readjusted the taxpayer’s inventory and found a deficiency in 1911 taxes of $2,028.22, a deficiency in 1918 taxes of $6,966.42, and an overassessment of $19.18 for 1916, from which determination this appeal was taken.
    DECISION.
    The determination of the Commissioner is approved.
   OFINION.

Ivins :

At the hearing the taxpayer admitted the correctness of the 1911 deficiency and of so much of the deficiency for 1918 as resulted from a disallowance of certain discount deductions from the closing inventories of 1917 and 1918, leaving the only question at issue that of whether the closing inventory at December 31, 1918, should be in the amount of $172,032.01, as determined by the Commissioner, or $160,701.99, as claimed by the taxpayer.

_ The taxpayer’s method of taking its inventory was a hybrid combination of the so-called retail method, the cost method, and the cost or market whichever .is lower method. It was done in such a way as to make it impossible of direct checking, and we feel that in the circumstances the Commissioner was correct in rejecting the inventory as submitted by the taxpayer and in reconstructing the inventory upon the basis of cost, which was the basis used in closing the inventory for the previous year.  