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Tax Reform Act of 1986, Pub. L. 99-514, sec. 801(d), 100 Stat.
2348. Section 448(d)(7) provides coordination with section 481
for those taxpayers that are required by section 448(a) to change
from the cash method of accounting.
Section 481 was enacted during 1954. It was designed to
prevent items of income or expense from being omitted or
duplicated as a result of a change in method of accounting
initiated by either the taxpayer or the Government. S. Rept.
1622, 83d Cong., 2d Sess. 307-311 (1954). Prior to the enactment
of section 481, consistent with rules laid down by the decided
cases, adjustments needed to prevent such omission or duplication
could be made only if the change in method of accounting was
initiated by the taxpayer. Dearborn Gage Co. v. Commissioner, 48
T.C. 190, 200 (1967); S. Rept. 1622, supra at 307-311. The
provision does not apply, however, to adjustments attributable to
years before 1954 unless the change in method of accounting is
initiated by the taxpayer. Sec. 481(a)(2). Section 481(c)
provides that a spread of the section 481(a) adjustment over more
than 1 year is allowed only as permitted under regulations.
Regulations interpreting section 481(c) provide that a section
481(a) adjustment may be taken into account under terms and
conditions agreed to by the Commissioner and the taxpayer. Sec.
1.481-5, Income Tax Regs.
Absent a provision similar to the cessation-of-business
acceleration provision, any portion of a section 481(a)
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