
    Appeal of ORKIN BROS.
    Docket No. 172.
    Submitted February 26, 1925.
    Decided June 15, 1925.
    
      Earl W. WallioJc, Esq., for the taxpayer.
    
      Robert A. Littleton, Esq., for the Commissioner.
    Before Ivins, Kornee, and Marquette.
    This appeal was submitted without argument upon the record, consisting of the pleadings and depositions of witnesses. It involves a deficiency of income and profits taxes for the years 1918 and 1919 in the amount of $3,573.83.
    FINDINGS OF FACT.
    The taxpayer is a Nebraska corporation operating a retail store for the sale of women’s apparel, etc.
    The taxpayer, in preparing its closing inventory for 1919, computed it on the basis of cost, and then reduced the result by 7% per cent in the belief that it thus was approximating cost.or market whichever was lower-
    Prices of some of the classes of goods handled by the taxpayer were lower at the end of 1919 than earlier in that year.
    . The Commissioner restored the taxpayer’s inventory to a cost basis by disallowing the reduction of 7V2 per cent and determined the deficiency for 1919 appealed from. The nature of the deficiency for 1918 does not appear, nor is any exception taken to it.
    DECISION.
    The determination of the Commissioner is approved.
   OPINION.

Ivins:

The taxpayer attempted to reduce a cost inventory to cost or market whichever is lower by the process of subtracting 7% per cent therefrom. The Commissioner rightfully rejected this method. The taxpayer tried to justify its action by producing witnesses who stated in very vague and indefinite terms that in some lines carried by the taxpayer prices were lower at the end of 1919 than earlier during that year. The taxpayer produced a number of other witnesses each of whom testified that she had purchased an article of clothing from the taxpayer at a stated price, but there is nothing in the record to indicate what the cost of such articles was.  