Laura E. Austin - Page 15

          opinion of the Commissioner, it clearly reflects income.  Sec.              
          1.446-1(a)(2), Income Tax Regs.  Thus, a prerequisite to the                
          Commissioner's requirement that a taxpayer change its present               
          method of accounting is a determination that the method used by             
          the taxpayer does not clearly reflect income.  Sec. 446(b);                 
          Hallmark Cards, Inc. v. Commissioner, 90 T.C. 26, 31 (1988).                
          Section 446 imposes a heavy burden on the taxpayer disputing the            
          Commissioner's determination on accounting matters.  Thor Power             
          Tool Co. v. Commissioner, 439 U.S. 522, 532-533 (1979).  To                 
          prevail, a taxpayer must establish that respondent's                        
          determination is "clearly unlawful" or "plainly arbitrary".  Id.            
          However, if the taxpayer's method of accounting is specifically             
          authorized by the Code or the regulations thereunder and has been           
          applied on a consistent basis, the Commissioner is ordinarily not           
          permitted to reject the taxpayer's method, as not providing a               
          clear reflection of income, and require the use of another                  
          method.  Hallmark Cards, Inc. v. Commissioner, supra at 31;                 
          Peninsula Steel Prods. & Equip. Co. v. Commissioner, 78 T.C.                
          1029, 1050 (1982).  Furthermore, this Court has held that the               
          Commissioner cannot require a taxpayer to change from an                    
          accounting method which clearly reflects income to an alternate             
          method of accounting merely because the Commissioner considers              
          the alternate method to more clearly reflect the taxpayer's                 
          income.  Molsen v. Commissioner, 85 T.C. 485, 498 (1985);                   
          Peninsula Steel Prods. & Equip. Co. v. Commissioner, supra at               

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