Laura E. Austin - Page 20

               Respondent objected to ASAP's use of the cash method,                  
          because under that method deductions and revenues were                      
          mismatched, which allegedly distorted ASAP's reported income.               
          Respondent's objection is actually a general objection to the               
          cash method of accounting; the mismatching of deductions and                
          revenue is inherent to the cash method.  See RLC Indus. Co. v.              
          Commissioner, supra at 493.  Respondent did not express any legal           
          argument or proffer any evidence that actually supports her                 
          determination that ASAP is required to use the accrual method of            
          accounting.  Respondent's argument essentially is that ASAP must            
          change from the cash method of accounting to the accrual method             
          because the accrual method would increase petitioners' taxable              
               Thus, based on the facts of the instant case, including the            
          fact that ASAP has consistently used the cash method of                     
          accounting without any evidence that it attempted to prepay                 
          expenses unreasonably or purchase supplies in advance, is not               
          required to maintain an inventory, and is not otherwise required            
          by the Code or regulations to use the accrual method of                     
          accounting, we find that respondent's determination that ASAP's             
          use of the cash method of accounting did not produce a clear                
          reflection of income was clearly unlawful and plainly arbitrary.            
          In so finding, we also find that respondent's position was not              
          substantially justified.  See Mauerman v. Commissioner, T.C.                
          Memo. 1995-237.  Furthermore, as it is evident from the Form 886-           

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