-19-
how the substantial-identity-of-results test should be applied
would provide the Commissioner unfettered discretion to change
any taxpayer's method of accounting, including a method which is
in conformity with the Code and regulations, and which clearly
reflects income, to a method selected by the Commissioner, if the
income determined under the taxpayer's method was not
substantially identical in result to the income determined under
the method selected by the Commissioner. We previously have 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, 78 T.C. at
1045; Bay State Gas Co. v. Commissioner, 75 T.C. at 422.
5(...continued)
clearly reflect income, in order to prevail, "the taxpayer must
demonstrate substantial identity of results between his method
and the method selected by the Commissioner." Id. at 356.
In Ansley-Sheppard-Burgess Co. v. Commissioner, 104 T.C.
367, 377 (1995), we held that a taxpayer that is required to use
the inventory method of accounting must meet the substantial-
identity-of-results test in order to show that the Commissioner's
determination requiring it to change from the cash method to the
accrual method of accounting was an abuse of discretion.
However, respondent's contention that we must apply the
substantial-identity-of-results test in cases where the taxpayer
is not required to use an inventory is without support in case
law. Id.
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