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Petitioner relies on Douthit v. United States, 299 F. Supp. 397
(W.D. Tenn. 1969), revd. on other grounds 432 F.2d 83 (6th Cir.
1970). On May 13, 1960, Congress enacted the Dealer Reserve
Adjustment Act of 1960, Pub. L. 86-459, 74 Stat. 124. That act
required the taxpayers in Douthit to change their method of
accounting. The taxpayers in Douthit sought to comply with the
new law on their tax return for 1961.
The court in Douthit said: "Section 446(e) requiring
consent of the Commissioner is not applicable to a change in
accounting required by law." Douthit v. United States, supra at
403. In Douthit, the taxpayers changed their treatment of an
item in the tax return they filed for the first year in which the
law was effective. Id. at 400. In the instant case, the change
in law on which petitioner relies occurred in 1984 and was
effective for taxable years beginning after December 31, 1983.
Deficit Reduction Act of 1984, Pub. L. 98-369, sec. 174(a)(1) and
(b)(2)(A), 98 Stat. 494, 704, 708. Petitioner first cited
section 267(a) in this case in 1994 after the audit of its 1987
return and while this case was pending. Petitioner does not
contend that it raised this issue with respondent before that
time. The rationale for allowing a taxpayer to change an
accounting method immediately after the law is changed, e.g., to
simplify prompt compliance by a large number of taxpayers, is
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