Milward Corporation - Page 10

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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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