*769OPINION.
Smith:The point involved in this proceeding, namely, whether the inventory at December 81, 1920, was taken upon a proper basis was substantially covered by the Board in Appeal of Thomas Shoe Co., 1 B. T. A. 124. In that case it was held that inventories used in computing the cost of goods sold must be computed both at the beginning and end of each year on substantially the same basis. At page 127 the Board said:
Even if tlie entire practice of the taxpayer had been erroneous, if the discounts were in fact cash discounts, the Commissioner clearly erred in insisting upon a change in method at the close of the year without making and allow*770ing a compensatory change at the beginning. What the inventory practice is, is of some importance; that the practice should be uniform is of the highest importance.
In this proceeding there is no contention that the basis of cost attempted to be reached by the respondent is the same basis upon which the inventory was taken at the close of the preceding year. The evidence of record indicates that the respondent’s agent who investigated the taxpayer’s books of account refused to consider an adjustment of the inventory at the close of 1919 for the reason that the statute of limitations had operated to bar the assessment of any additional tax if such might be found for that year.
In Appeal of The Buss Company, 2 B. T. A. 266, the Board said at page 267:
The sole purpose of inventory valuation is to reflect income as clearly as possible. The result of the Commissioner’s computation is obviously to distort the true situation, * * * However faulty the taxpayer’s 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 Thomas Shoe Company, 1 B. T. A. 124, and Appeal of George C. Peterson Co., 1 B. T. A. 690.
See also Appeal of C. Willenborg & Co., 5 B. T. A. 788.
It appears to us that the only material question involved in this proceeding is whether the inventory on under par merchandise, taken in the manner in which it was taken by the petitioner, was the taking of an inventory at “market” within the meaning of the statute, and the regulations. The respondent has particularly covered this question in article 1582 of ^Regulations 45, as amended by Treasury Decision 3296, the amended article reading in part as follows:
Any goods in an inventory which are unsalable at normal prices or unsalable in the normal way because of damage, imperfections, shop wear, changes of styles, odd or broken lots, or other similar causes, including secondhand goods taken in exchange, should be valued at bona fide selling price less cost of selling whether basis (a) or (b) is used, * * *. In respect to normal goods whichever basis (a) or (b) is adopted must be applied with reasonable consistency to the entire inventory. Taxpayers were given an option to adopt the basis of either (a) cost or (b) cost or market, whichever is lower, for their 1920 inventories, and the basis adopted for that year is controlling and a change can now be made only after permission is secured from the Commissioner.
This ruling of the Commissioner appears to us to be in conformity with the intendment of the statute that income be correctly reflected. The evidence shows that the petitioner .took its inventory at the close of 1920 strictly in accordance with the regulations of the Commis*771sioner as amended. The action of the respondent in increasing the inventory at December 31, 1920, in the amount of $16,523.11, was in error.
Judgment will be entered on 15 days' notice, under Rule 50.
Considered by Littleton and Love.