Thor Power Tool Co. v. Commissioner

Thor Power Tool (plaintiff) wrote down inventory it deemed overvalued and excess under the lower-of-cost-or-market accounting method, while continuing to offer that same inventory for sale at its original, higher prices, without presenting evidence of actual offers or sales supporting the lower valuation; the IRS (defendant) disallowed the write-down, finding that although the method complied with generally accepted accounting principles (GAAP), it didn't clearly reflect Thor's actual income, and the Tax Court and Seventh Circuit affirmed before the Supreme Court granted certiorari.