*479OPINION.
Van Fossan:The sole question for determination is whether or not petitioners complied with the provisions of the law in the matter of inventory valuations for the years 1918 and 1919. The issue relative to the invested capital hinges upon, and is automatically disposed of by a decision of the question of inventories. All other issues were abandoned at the hearing.
Section 203 of the Revenue Act of 1918 provides that in certain events inventories shall be taken “upon such basis as the Commissioner, with the approval of the Secretary, may prescribe as conforming as nearly as may be to the best accounting practice in the trade or business and as most clearly reflecting the income.” By this delegation of authority, subject to the two express limitations contained in the statute, the power to choose among the various methods of taking inventories is conferred on the Commissioner. The Commissioner pursuant to the above grant of authority has prescribed two methods for general application, subject to certain specific exceptions not here applicable. These methods are (1) “cost,” or (2) “cost or market, whichever is lower.” If a taxpayer took its inventories in accordance with either method it conforms to the statute and regulations.
In article 1584 of Regulations 45, the Commissioner has defined “ market ” as follows:
Under ordinary circumstances, “ market ” means the current bid price prevailing at the date of the inventory for the particular merchandise in the volume in which ordinarily purchased by the taxpayer * * *.
*480That this definition could not have universal application is indicated by the opening clause, “ under ordinary circumstances.” If extraordinary circumstances exist, we must look beyond the quoted definition. The Commissioner has recognized that the definition is necessarily elastic, and in the saíne regulations it is further provided:
Where no open market quotations are available, the taxpayer must use such evidence of a fair market price at the date or dates nearest the inventory as may be available * * *. Where, owing to abnormal conditions, the taxpayer has regularly sold such merchandise at prices lower than the current bid price as above defined, the inventory may be valued at such prices * * *.
The essential inquiry in every case involving the use of inventories claimed to have been taken at “ cost or market, whichever is lower,” is to determine whether or not the market value used represents the fair market value of the merchandise under the peculiar facts and circumstances of the particular case. In Appeal of C. Willenborg & Co., 5 B. T. A. 788, we held that the. two bases of valuation announced by the Commissioner are not exclusive of all others, and that a taxpayer may employ any basis (1) that conforms as nearly as may be to the best accounting practice in the trade or business, and (2) that most clearly reflects true income.
The uncontradicted evidence in this case is that the method employed by petitioner was generally used in the trade or business in which petitioner was engaged. There is no evidence before us to dispute the contention that it conformed to the best accounting practice in that trade or business. It was consistently employed by petitioners, before, during, and after the taxable years and the inventory so arrived at was used for all business purposes — income-tax returns, credit statements and financial reports.
This Board has emphasized repeatedly the importance of consistency in the method of inventorying.
However faulty the taxpayer’s inventory method was, we believe that greater weight should be given to consistency than to any particular method of inventorying or basis of valuation so long as the method or basis used substantially reflects the income. This rule has been given great weight both by the Commissioner and the Board. Appeal of The Buss Co., 2 B. T. A. 266, 268.
See also Appeal of Thomas Shoe Co., 1 B. T. A. 124; and Appeal of Boyne City Lumber Co., 7 B. T. A. 36.
In this case the facts establish that there was no replacement market price for much of the petitioners’ merchandise and that reorders could not be made. There was, therefore, no “ market ” in the usual interpretation of that term. In this situation petitioners determined the retail sales value of its merchandise as set forth in the findings of fact and used this, or cost, whichever was lower, as the *481basis of its inventory. We believe that under all the circumstances there was a substantial compliance with the law.
That “ market value ” for inventory purposes generally means the replacement cost to the taxpayer or the price at which the taxpayer may replace the particular goods by purchase in the open market is not disputed. Where, however, the merchandise is not available for reorders and there is no replacement market, the general rule fails to meet the situation and it becomes necessary to seek another basis for measuring market value. Merchandise such as that here involved is not valueless merely because no market value, in the general sense of that term, is determinable, nor do such facts justify the exclusion of such merchandise from the inventory. Conversely, there is no justification for requiring the inclusion of such merchandise in the inventory at cost, or some theoretical market value, greater than its actual value. To do so would distort income. When petitioners fixed and entered on the inventory sheets the price at which an article of merchandise could be moved, they were in practical effect determining the “market” on that article. The only way, if at all, petitioners could have replaced much of their merchandise was to buy from other retail stores handling the same lines of goods. In such event, obviously, the replacement price to them would be the retail or sales price of his competitor. The result is the same precisely as that arrived at by petitioners’ method.
The Board has heretofore recognized resale or retail sales value as a proper criterion of market value for inventory purposes, in those cases where the goods are obsolete or affected by other conditions so that they are not available in the replacement market. In the case of an automobile dealer who accepted used cars in part payment for new cars and valued such used cars for inventory purposes at their resale value, which was less than the “ trade-in ” or cost value, the Board held:
The taxpayer took its inventories of new cars, tractors, and implements on the basis of cost or market, whichever was lower. Its inventory of used cars was taken on the basis of market values which were uniformly less than the “ trade-in ” values. In the absence of evidence that the inventories of used cars were taken at more than the market the taxpayer’s determinations of such market values are approved. Appeal of Adams Motor Co., 4 B. T. A. 589, 595.
In two earlier cases the Board recognized the propriety under certain circumstances, of measuring market value by retail sales value. Appeals of Summit Wholesale Grocery Co., 1 B. T. A. 1040, and American Mills Co., 2 B. T. A. 460.
In our opinion the sale value of merchandise as determined by the petitioners represented its fair market value and where such value was less than cost it was properly used for inventory purposes. We *482are further of the opinion that petitioners’ inventories consistently taken upon such basis would most clearly reflect income. The Commissioner erred in rejecting the inventories.
Reviewed by the Board.
Judgment will be entered on 15 days’ notice-, under Rule 50.