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Petitioners contend that respondent's position on the method
of accounting issue was not reasonable as a matter of law or
fact. In support of their contentions, petitioners allege that
ASAP is not expressly prevented from the use of the cash method
of accounting by any section of the Internal Revenue Code (the
Code) or regulations. In support of their position, petitioners
cite section 446(c)(1) which provides that a taxpayer may compute
taxable income under the cash receipts and disbursements method
of accounting. In addition, petitioners contend that
respondent's application of the substantial-identity-of-results
test to support her determination is an abuse of discretion.
The issue we must decide is whether the Commissioner's
determination that ASAP report its income on the accrual method
of accounting constitutes an abuse of discretion. In reviewing
the Commissioner's determination that the taxpayer's method of
accounting does not clearly reflect income, the function of this
Court is to determine whether there was an adequate basis in law
for the Commissioner's conclusion. RCA Corp. v. United States,
664 F.2d 881, 886 (2d Cir. 1981). The Commissioner is granted
broad discretion in determining whether a taxpayer's use of an
accounting method clearly reflects income. Sec. 446(b); United
States v. Catto, 384 U.S. 102, 114 & n.22 (1966), rehearing
denied 384 U.S. 981 (1966); Commissioner v. Hansen, 360 U.S. 446,
467 & n.12 (1959); Lucas v. Am. Code Co., 280 U.S. 445, 449
(1930). No method of accounting is acceptable unless, in the
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