Oakcross Vineyards, LTD., Dennis D. Groth, Tax Matters Partner - Page 20

                                       - 20 -                                         
          Commissioner, supra at 749; see also Stephens Marine, Inc. v.               
          Commissioner, supra at 686.  Accordingly, a determination                   
          pursuant to section 446(b) is entitled to more than the usual               
          presumption of correctness, Ansley-Sheppard-Burgess Co. v.                  
          Commissioner, 104 T.C. 367, 370 (1995), and cases cited therein,            
          and the taxpayer bears a heavy burden of proof in overcoming a              
          determination that an accounting method does not clearly reflect            
          income, Thor Power Tool Co. v. Commissioner, supra at 532-533.              
          Moreover, even if a taxpayer, including a farmer, is otherwise              
          entitled to use the cash method of accounting, section 446(b) may           
          be used to prevent abuses of the method, Van Raden v.                       
          Commissioner, 71 T.C. at 1103, and mere compliance with a                   
          generally permitted method does not foreclose the Commissioner's            
          exercise of discretion pursuant to section 446(b), Ford Motor Co.           
          v. Commissioner, 102 T.C. 87, 99 (1994), affd. 71 F.3d 209 (6th             
          Cir. 1995).  A taxpayer may challenge the Commissioner's                    
          determination on the grounds that its accounting method clearly             
          reflects income, Auburn Packing Co. v. Commissioner, 60 T.C. 794            
          (1973), and, if the taxpayer's method of accounting does clearly            
          reflect income, the Commissioner may not require a change to                
          another method that more clearly reflects income.  Ansley-                  
          Sheppard-Burgess Co. v. Commissioner, supra at 371.                         
               Historically, farmers have been allowed to use the cash                
          method, which enables them to employ a simplified accounting                
          procedure.  United States v. Catto, 384 U.S. 102, 116 (1966);               

Page:  Previous  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  Next

Last modified: May 25, 2011