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We find that there was no change in accounting method, that
Woodbine's combination of methods clearly reflected income during
1988 and 1989, and that, although section 1041 prevents Howard's
March 1989 transfer of his interest in Woodbine to Alice from
being treated as a gain recognition event to him, the transfer
triggered the accrual of Howard's share of the income from crypt
sales that had been previously deferred and that would not have
been otherwise includable in income until the completion of the
Phase II mausoleum in May 1989.
Sales of crypts during construction significantly differed
from sales of cemetery plots. When a cemetery plot was sold,
ownership of the plot was transferred to the purchaser at
approximately the same time as Woodbine received cash. The plot
was ready for excavation and use, and Woodbine's cost of the sale
was known. On the other hand, when a mausoleum crypt was sold
during construction, ownership of the crypt was not transferred
and the crypt was not ready for occupancy until the mausoleum
building was completed. Prior to completion of the mausoleum,
Woodbine's cost of sale of crypts could only be estimated.
Because sales of crypts significantly differed from sales of
plots, the method of accounting adopted for crypt sales was
neither a change in the overall method of accounting nor a change
in the treatment of a material item. The method of accounting
for crypt sales was a new method of accounting for a different
item. Because the new accounting method was not a change in
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