Laura E. Austin - Page 14

               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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