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additions thereto under sections 6653(b)(1)(A) and (B)1 (for
1987) and section 6653(b)(1) (for 1988). Respondent reflected
this determination in a notice of deficiency issued to Richard D.
and Betty L. Hudson on December 8, 1993. The notice of
deficiency shows the following deficiencies and additions
thereto:
Additions to Tax
Sec. Sec. Sec.
Year Deficiency 6653(b)(1)(A) 6653(b)(1)(B) 6653(b)(1)
1987 $12,989 $9,742 1 ---
1988 19,483 --- --- $14,612
150 percent of the interest due on $12,989.
Following concessions, we must decide:
1. Whether respondent abused her discretion in requiring
petitioner's business to use an accrual method of accounting for
purchases and sales. We hold she did not.
2. Whether petitioner may compute his adjustment under
section 481(a), which results from the change to an accrual
method, by reference to the 3-year rule under section 481(b).
We hold he may not.
Unless otherwise stated, section references are to the
Internal Revenue Code in effect for the years in issue. Rule
references are to the Tax Court Rules of Practice and Procedure.
Dollar amounts are rounded to the nearest dollar. We use the
1 Respondent’s notice of deficiency erroneously referred to
sec. 6653(b)(2)(B).
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