*1067OPINION.
The question at issue in this case is the market price of petitioner’s inventory at December 31, 1920, no question being-raised as to the applicability of the “ cost or market, whichever is lower ” basis, or that market was lower than cost at December 31, 1920.
The evidence is not clear as to the method pursued by the petitioner in arriving at the valuation for its inventory, though it was shown that the market'-price inventory, which was prepared by the petitioner and accepted by the Commissioner, was prepared on the basis of what the petitioner considered it could replace the various items for by purchasing them in the market. The fair-value inventory for which the petitioner now contends, ivas based on what it considered could be realized on a sale of the finished articles and material on hand. The reductions from cost to fair value seem to have been made in an arbitrary manner. For example, typical notations on the inventory sheet are that a certain group of items could not be sold for 50 cents on the dollar, and a reduction was then made of one-half to arrive at a fair value.
The Board is not convinced that the fair-value inventory, as claimed by the petitioner, represents an inventory taken on the basis of cost or market, whichever is lower. Doubtless, there was a great slump in petitioner’s business at or near the close of 1920, but this of itself would not authorize the determining of market without regard to the price at which items in an inventory were selling on the open market. “ Market value ” has been interpreted by the courts on various occasions. Sanford v. Peck, 63 Conn. 486; 27 Atl. 1057, contains the following definition:
The expressions “ actual value,” “ market value,” or “ market price,” when applied to any article, mean the same thing; they mean the price or value of *1068the article established or shown by sales, public or private, in the way of ordinary business.
Likewise, Barrett v. The Wacousta, 2 Fed. Cas. 928:
To make a market price there must be buying and selling, purchase and sale. The price of gold on ’change is fixed by sales made. A price cannot be established by a mere offer to sell, or an offer to pux*chase. Sales must be consummated by agreement to make a market price. The minds of the buyer and seller must unite on a price.
The further consideration exists that the completed phonographs which petitioner had on hand, as well as those which were partly finished, were manufactured under a contract for their sale at a fixed price. Eventually, at least some of these machines were accepted under the contract, and the motors which had been billed to the petitioner by the Shapleigh Hardware Co. for use on machines being-manufactured for this company were accepted back by the company at the same price as billed to the petitioner. The question might well arise here whether any valuation other than cost could be used where the petitioner is protected against a change in market prices by existing contracts at an inventory date, Ewing-Thomas Converting Co., 1 B. T. A. 121.
On a consideration of the entire evidence, however, the Board is of the opinion that when the petitioner prepared an inventory on the basis of replacement cost of the items in its inventory, this more nearly represents a market value for its inventory than that which we are now being asked to accept as .the fair value of its inventory.
Judgment will be entered for the respondent.
Considered by Smith.