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Sec. 1.446-1(e)(2)(ii)(a), Income Tax Regs. In determining
whether a change in a reporting practice involves the proper time
for the inclusion or deduction of an item, the relevant question
generally is whether the change affects the aggregate amount of
taxable income over the taxpayer's lifetime. If the change
affects the amount of taxable income for 2 or more taxable years
without altering the taxpayer's lifetime taxable income, then it
is strictly a matter of timing and constitutes a change in method
of accounting. Copy Data, Inc. v. Commissioner, 91 T.C. 26, 30-
31 (1988); Schuster's Express, Inc. v. Commissioner, 66 T.C. 588,
597 (1976), affd. without published opinion 562 F.2d 39 (2d Cir.
1977).
Petitioners argue that respondent's adjustments to the
method used by the Dealerships to report income and expense under
the VSC program do not trigger application of section 481. They
correctly point out that to the extent unreported amounts were
ultimately refunded to the purchaser or paid to Travelers, the
Administrator, the Administrator’s sales agent, BPI, or other
authorized repair facilities, the Dealerships’ reporting practice
resulted not in deferral of income but rather in permanent
exclusion. "Here * * * the issue is whether income should be
reported by the Dealerships, not when it should be reported.
The amounts which Respondent proposes to include in a Code sec.
481 adjustment were not reported at all." Consequently,
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