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Petitioner contends that changing the year it deducts its
officers' bonuses is not a change of accounting method, and that
it is a correction required to comply with section 267(a).
Section 267(a)(2), which was enacted in 1984, bars a taxpayer
from deducting a payment to a related taxpayer before the related
taxpayer includes the payment in income. Petitioner contends
that its accrual of a deduction for the bonuses in the year they
are awarded (before they are paid) violates section 267(a)(2)
because petitioner's officers included the bonuses in income in a
later year. Petitioner contends that it does not need
respondent's consent to change to comply with section 267(a)(2).
4(...continued)
petitioner must have consent under sec. 446(e) is new matter on
which respondent bears the burden of proof. We agree.
Respondent first raised this issue in the amended answer. A new
theory that is presented to sustain a deficiency is treated as a
new matter when it either increases the original deficiency or
requires the taxpayer to present different evidence. Wayne Bolt
& Nut Co. v. Commissioner, 93 T.C. 500, 507 (1989); Achiro v.
Commissioner, 77 T.C. 881, 890-891 (1981). This issue is a new
matter because the evidence relevant to it differs from that
relevant to the original determination. Respondent bears the
burden of proof for any new matter. Rule 142(a).
Petitioner contends that respondent failed to carry the
burden of proof. We disagree. The parties do not dispute that
petitioner had a longstanding practice of deducting the bonuses
in the year it authorized them and paying them in the following
year, that petitioner seeks to change the year it deducts the
bonuses for its officers from the year in issue to the next
taxable year to comply with sec. 267(a) several years after the
law changed, and that petitioner does not have respondent's
consent to do so. We decide this issue based on those facts.
Thus, the burden of proof does not affect our decision on this
issue.
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