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contrary, applied the substantial-identity-of-results test in
Asphalt Prods. Co. v. Commissioner, supra. The taxpayer, which
produced and sold emulsified asphalt, had employed the cash
method of accounting from its inception. Through 1973, the
taxpayer had only nominal inventories on hand at yearend because
it normally closed down its operations for several weeks before
the end of the year. The taxpayer's principal customers were
county governments in Tennessee that used emulsified asphalt for
road construction and maintenance. The county governments
received revenues required for that purpose from their share of
State gasoline taxes. As an effect of the Arab oil embargo of
1973, the price of emulsified asphalt rose rapidly while the
consumption of gasoline dropped sharply. Consequently, the
taxpayer's accounts receivable increased substantially between
January 1, 1974, and January 1, 1975. Additionally, because
suppliers of the petroleum residue that was the principal
ingredient of emulsified asphalt required their customers to
accept their allocations of the petroleum residue on a monthly
basis, the taxpayer had inventories on hand at the end of 1974
and 1975. On audit, the Commissioner determined that the
taxpayer had to use the accrual method of accounting because the
use of inventories was necessary to clearly reflect income due to
the fact that the production and sale of merchandise was an
income-producing factor. The Commissioner determined
additionally that the fluctuations in accounts receivable
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