Laura E. Austin - Page 18

               Respondent's final argument was that if petitioners are to             
          establish that respondent has abused her discretion in                      
          determining that ASAP's use of the cash method of accounting did            
          not produce a clear reflection of income, petitioners must                  
          demonstrate substantially identical results between ASAP's method           
          and the method selected by the Commissioner.  We disagree.                  
          Respondent's contention that we must apply the substantial-                 
          identity-of-results test in cases where the taxpayer is not                 
          required to maintain an inventory is without support in the case            
          law.  Ansley-Sheppard-Burgess Co. v. Commissioner, 104 T.C. 367,            
          377 (1995).                                                                 
               We find that respondent is mistaken in her understanding of            
          the correct application of the substantial-identity-of-results              
          test.  Before the substantial-identity-of-results test can be               
          applied, the Commissioner must determine that the taxpayer is               
          using a method of accounting that does not clearly reflect                  
          income.  In certain circumstances we apply the substantial-                 
          identity-of-results test to determine whether the method used by            
          the taxpayer clearly reflects income.5  Respondent's version of             

               5    The substantial-identity-of-results test is a judicial            
          creation; the test was first articulated in Wilkinson-Beane, Inc.           
          v. Commissioner, 420 F.2d 352 (1st Cir. 1970), affg. T.C. Memo.             
          1969-79.  In that case, a cash-method taxpayer who was required             
          to maintain an inventory and thus report income on the accrual              
          basis, argued that the difference in income determined by the               
          method it used and the method selected by the Commissioner was              
          negligible. The Court found that where the Commissioner has                 
          determined that the accounting method used by a taxpayer does not           

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