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Similarly, petitioner contends that it does not need respondent's
consent to change from treating the bonuses incorrectly to
treating them correctly.5
Respondent does not dispute that Chasin, Hanson, and Searing
are related for purposes of section 267(a). However, even if
section 267(a) applies, we conclude for reasons discussed next
that petitioner would need respondent's consent to change the
year it deducts the officers' bonuses.
2. Whether Changing the Year Petitioner Deducts Bonuses Is
a Change of a Material Item for Purposes of Section
446(e)
We first decide whether changing the year petitioner deducts
its officers' bonuses is a change in the treatment of a material
item for purposes of section 446(e).
A taxpayer generally must have the consent of the Secretary
to change the method of accounting it uses for material items.
Sec. 446(e); Pacific Enters. & Subs. v. Commissioner, 101 T.C. 1,
18 (1993); Wayne Bolt & Nut Co. v. Commissioner, 93 T.C. 500, 509
(1989); Standard Oil Co. v. Commissioner, 77 T.C. 349, 380
(1981); secs. 1.446-1(e)(2)(ii)(a), 1.481-1(a)(1), Income Tax
5Respondent alternatively contends that petitioner complied
with sec. 267(a)(2) because petitioner's officers constructively
received their bonuses in the year in issue. We need not decide
this issue because we conclude that sec. 267(a) does not apply,
and if it did, petitioner requires respondent's consent to change
the year it deducts its officers' bonuses.
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