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outstanding at the end of 1990 be recognized as
income in 1990. [Petitioner] objected to this
proposed change in accounting because it required
the inclusion in income in 1990 of interest on
installment note payments that are not due at
the end of 1990 and won't be due for months or
even years in the future.
According to petitioner, respondent has, in effect, placed
petitioner on an erroneous method of accounting to the
extent that respondent computes petitioner's income by
reference to unearned interest and has, thus, exceeded her
authority to change petitioner's method of accounting under
section 446(b).
We disagree. Neither the purpose nor the necessary
effect of respondent's adjustment is to include in
petitioner's gross income for 1990 interest that will
accrue after 1990. As described above, petitioner treated
interest as having been earned only when a loan was fully
paid off or petitioner repossessed the automobile securing
the loan and the loan was closed on petitioner's books.
The change of accounting method that was made by respondent
is to require interest to be ratably included in
petitioner's income over the life of the loan. Based upon
petitioner's records of loans outstanding at the end of
1990, respondent's agent found that interest in the amount
of $3,084,179 had been earned through the end of 1990.
Petitioner does not attack that computation.
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