James M. Rankin and Shirley Rankin - Page 9

                                        - 9 -                                         
               As of January 1, 1988, petitioner wholly owned the following           
          BUF accounts:  James M. Rankin (Ann); James M. Rankin-Hayward;              
          and James M. Rankin #2.                                                     
                                       OPINION                                        
               Because section 481(a)3 applies only if there is a change in           
          a method of accounting, the parties’ dispute in the instant case            
          centers on whether the change in the treatment for tax purposes             
          of payments into and disbursements from the BUF accounts                    
          maintained in the course of petitioner’s bail bond business is a            
          change in method of accounting.  If so, respondent may make an              





          3                                                                           
               Sec. 481(a) provides:                                                  
               SEC. 481.  ADJUSTMENTS REQUIRED BY CHANGES IN METHOD OF                
                         ACCOUNTING.                                                  
                    (a) General Rule.--In computing the taxpayer’s taxable            
               income for any taxable year (referred to in this section as            
               the “year of change”)--                                                
                         (1) if such computation is under a method of                 
               accounting different from the method under which the                   
               taxpayer’s taxable income for the preceding taxable year               
               was computed, then                                                     
                         (2) there shall be taken into account those                  
          adjustments which are determined to be necessary solely                     
          by reason of the change in order to prevent amounts from                    
          being duplicated or omitted, except there shall not be                      
          taken into account any adjustment in respect of any                         
          taxable year to which this section does not apply                           
          unless the adjustment is attributable to a change in the                    
          method of accounting initiated by the taxpayer.                             




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