-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
income.
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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