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inconsistency between an asymmetrical treatment of revenues and
costs for tax purposes and the symmetrical treatment required by
generally accepted accounting principles would not have gone
unnoticed. Surely, Treasury or the committee staff would have
believed such a discrepancy required explicit justification.
Their unanimous silence indicates that no such discrepancy was
anticipated, let alone intended.
For all the foregoing reasons, we find petitioners' reading
of congressional intent wholly unpersuasive, and we reject it.3
3 Petitioners attack the Regulation on a number of
additional grounds. First, they argue that other provisions of
the regulations under sec. 458 adopt their view. In particular,
they point to sec. 1.458-1(e), Income Tax Regs., which deals with
the operation of the suspense account required by sec. 458(e) as
a transitional adjustment mechanism. Because sec. 1.458-1(e),
Income Tax Regs., tracks the statutory language closely in
explaining the derivation of the "amount excluded" and fails to
mention cost of goods sold adjustments, petitioners conclude that
respondent has implicitly conceded that cost of goods sold
adjustments do not comport with the statutory scheme. We
disagree. The reason there is no reference to correlative
adjustments under par. (g) in the discussion of the suspense
account mechanics in par. (e) is that the cross-reference appears
in par. (g). Sec. 1.458-1(g)(2), Income Tax Regs. A careful
reading of par. (g) leaves no doubt whatever that the Regulation
requires correlative cost adjustments to be made in the
computation of gross income using the suspense account.
Second, petitioners argue that the Regulation is
inconsistent with sec. 458(c)(1), which provides that "An
election under this section may be made without the consent of
the Secretary." Petitioners read this provision as prohibiting
the Secretary from establishing additional requirements for the
election. We think this argument represents a misunderstanding
of sec. 458(c)(1). This paragraph deals only with procedural
matters: a taxpayer must make an election to claim the benefits
of the statute; the election shall be made in such manner as the
Secretary prescribes, and no later than the deadline for filing
(continued...)
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