What is the significance of the Thor Power Tool Co. decision?

A. The regulations state that inventory methods used by a taxpayer must conform to reasonable accounting practives in the trade or business. Regulations sec. 1.471-4(b) states that obsolete and other slow-moving inventory can be written down even if the selling price is not reduced. Thor Power Tool Co. Wrote-off the cost of obsolete inventory. In Thor Power Tool Co., the supreme court held that writing off the cost.

B. The regulations state that inventory methods used by a taxpayer must conform to the best accounting practive in the trade or business and it must clearly reflect income. In Thor Power Tool Co., the Supreme Court held that the clear reflection of income standard shall prevail in cases where the two standards conflict. Regulation Sec. 1.471-4(b) states that obsolete and other slow-moving inventory cannot be written down unless the selling price is also reduced. Thor Power Tool Co. wrote-off the cost of obsolete inventory. The Supreme Court held this practice was not acceptable as it conflicted with the clear reflection of income requirement.

C. Thor Power Tool Co. wrote-off the cost of obsolete inventory. The Supreme Court held this practice to be acceptable as it clearly reflected the companys income.

D. Thor Power Tool Co. wrote-off the cost of obsolete inventory. The Supreme Court held this practice to be acceptable as it conforms to the best accounting practice in the trade or business.