Oakcross Vineyards, LTD., Dennis D. Groth, Tax Matters Partner - Page 19

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               Petitioner contends that Vineyards was permitted to use the            
          cash method, that the method was generally accepted in the                  
          vineyard industry, that it was consistently applied by Vineyards,           
          and that it clearly reflected Vineyards' income.  Petitioner                
          argues that it is not required to show a business purpose for the           
          deferred payment arrangement with Winery but that such a purpose            
          exists, namely the establishment of a long-term relationship                
          between Vineyards and Winery.  Petitioner urges that the                    
          relationship of Vineyards to Winery is irrelevant to the question           
          whether Vineyards may use the cash method of accounting.                    
               Generally, section 446(b) provides that, if a taxpayer's               
          method of accounting does not clearly reflect income, then the              
          computation of taxable income shall be made pursuant to a method            
          that, in the opinion of the Commissioner, does clearly reflect              
          income.  Section 446(b) vests the Commissioner with broad power             
          to determine whether the accounting methods used by a taxpayer              
          clearly reflect income, Thor Power Tool Co. v. Commissioner, 439            
          U.S. 522, 532 (1979), and to require revision of a method that              
          does not clearly reflect income, Commissioner v. Van Raden, 650             
          F.2d 1046, 1048 (9th Cir. 1981), affg. 71 T.C. 1083 (1979); Cole            
          v. Commissioner, 586 F.2d 747, 749 (9th Cir. 1978), affg. 64 T.C.           
          1091 (1975); Stephens Marine, Inc. v. Commissioner, 430 F.2d 679,           
          686 (9th Cir. 1970), affg. T.C. Memo. 1969-39.  "An action taken            
          by the Commissioner under section 446 will be set aside by the              
          courts only if there is a clear abuse of discretion."  Cole v.              

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