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taxpayer's income. Molsen v. Commissioner, 85 T.C. 485, 498
(1985); Peninsula Steel Prods. & Equip. Co. v. Commissioner,
supra at 1045; Bay State Gas Co. v. Commissioner, 75 T.C. 410,
422 (1980), affd. 689 F.2d 1 (1st Cir. 1982).
Section 446 specifically authorizes a taxpayer to use the
cash receipts and disbursements method of accounting (cash
method) to compute taxable income, provided it is the method of
accounting the taxpayer regularly uses to compute his income in
keeping his books, and it clearly reflects income. Sec. 446(a),
(b) and (c)(1).
Generally, under the cash method of accounting, an item of
income or expense is reported when received or paid without
regard to the economic events giving rise to the item. On the
other hand, under the accrual method of accounting, an item of
income or expense generally is reported for the accounting period
during which all the events have occurred which fix the
taxpayer's right to receive the item of income or which establish
the fact of liability giving rise to the deduction, and the
amount thereof can be determined with reasonable accuracy.
Hallmark Cards, Inc. v. Commissioner, supra at 32; secs. 1.446-
1(c)(1)(ii), 1.451-1(a), Income Tax Regs. Thus, each method
properly applied to the same facts may yield different results.
This Court is aware that "By definition, the cash method may
result in mismatching between expenses and income where expenses
are paid in a year prior to the receipt of the related income."
RLC Indus. Co. v. Commissioner, 98 T.C. 457, 493 n.29 (1992),
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