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completion method for financial statement purposes and used the
cash method of accounting for income tax purposes. Petitioner
did not file a Form 3115 (Application for Change in Accounting
Method) or otherwise seek respondent's approval to change its
method of accounting. See sec. 1.446-1(e)(3)(i), Income Tax
Regs.
Section 446(e) provides that a taxpayer generally is
required to secure the Commissioner's consent before changing its
method of accounting. See sec. 1.446-1(e)(2)(i), Income Tax
Regs. Further, section 1.446-1(e)(2)(ii)(a), Income Tax Regs.,
provides that a change from the accrual method to the cash method
of accounting is a change in a taxpayer's method of accounting.
In view of petitioner's failure to obtain consent from respondent
before changing its method of accounting, we sustain as a matter
of law respondent's determination that petitioner must use the
accrual method of accounting for its taxable years ending January
31, 1989 and 1990.
In order to reflect the foregoing,
An order granting respondent's
Motion for Summary Judgment and
decision for respondent will be
entered.
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Last modified: May 25, 2011