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and Premiums until the corresponding deductions are allowed."
The authority on which they rely is Artnell Co. v. Commissioner,
400 F.2d 981 (7th Cir. 1968), revg. and remanding 48 T.C. 411
(1967).
Inasmuch as the use of the accrual method serves different
purposes under the Federal income tax laws and under financial
accounting, the matching of income with related expenses often
will not result in the clear reflection of income for Federal
income tax purposes. Thor Power Tool Co. v. Commissioner, 439
U.S. 522, 539-544 (1979); RCA Corp. v. United States, 664 F.2d
881, 885-886 (2d Cir. 1981). Section 446(b) provides that if the
method of accounting used by the taxpayer does not clearly
reflect income, the computation of taxable income shall be made
under such method as, in the Commissioner's opinion, does clearly
reflect income. The courts generally have upheld the
Commissioner's discretion under section 446(b) to deny taxpayers
the right to defer prepaid service income until the periods when
related costs will be incurred and taken into account. Schlude
v. Commissioner, 372 U.S. 128 (1963); American Auto. Association
v. United States, 367 U.S. 687 (1961); Automobile Club of
Michigan v. Commissioner, 353 U.S. 180 (1957); RCA Corp. v.
United States, supra at 885-888.
In Artnell Co. v. Commissioner, supra, the Court of Appeals
for the Seventh Circuit held that a baseball team owner's
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