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Petitioner points out that a taxpayer may recharacterize
interest or salary as dividends without being considered to have
changed its method of accounting. Section 1.446-1(e)(2)(ii)(b),
Income Tax Regs., does not apply here because the issue here is
the timing, not the character, of the deduction.
Petitioner relies on Evans v. Commissioner, T.C. Memo. 1988-
228, and Gimbel Bros., Inc. v. United States, 210 Ct. Cl. 17, 535
F.2d 14, 23 (1976). Both cases held that the taxpayer may
correct the treatment of an item without the Commissioner's
consent. Unlike those in the instant case, the taxpayers and the
corporation in Evans made the correction on their returns for the
year in issue.
In Gimbel Bros., Inc. v. United States, supra, the taxpayer
elected to use the installment method of accounting to report
income from installment sales but applied it erroneously. Id. at
15. The taxpayer filed amended returns to correct the error
apparently before the Commissioner audited the year in issue.
Unlike the taxpayers in Evans and Gimbel Bros., petitioner did
not seek to change how it treats the bonuses on a tax return or
an amended return. Rather, petitioner did so as part of this
case after respondent's audit.
Petitioner has cited other cases relating to a taxpayer's
change in accounting methods. We have considered all of those
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