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After concessions, the issues for decision are: (1)
Whether respondent abused her discretion under section
446(b) in computing an adjustment to change petitioner's
method of accounting for interest income from its
automobile finance business; (2) whether petitioner is
entitled to deduct a loss of $336,912 that was claimed on
its amended return; (3) whether petitioner is liable for
the civil fraud penalty under section 6663(a); and (4)
whether petitioner is liable for the accuracy-related
penalty under section 6662(a) due to a substantial
understatement of income tax.
FINDINGS OF FACT
Some of the facts have been stipulated by the parties.
The stipulation of facts, the supplemental stipulation of
facts, and the exhibits attached thereto are incorporated
herein by this reference.
Petitioner was incorporated in Oklahoma on January 24,
1964, for the purpose of engaging in the business of
automobile financing. At the time its petition was filed
in this Court, petitioner's principal place of business
was in Lawton, Oklahoma. Petitioner reported income and
expenses for Federal income tax purposes on the basis of
the accrual method of accounting and used the calendar year
as its taxable year.
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