-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
(continued...)
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