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result of the change, because the proper time for reporting this
income under the accrual method would have passed. In cases (1)
through (4) the accrual method would allow the Dealership to
claim a deduction for expenses corresponding to amounts
previously excluded from gross income. Since excluding an amount
from income is essentially equivalent to recognizing income and
offsetting it by a current deduction, the change in method of
accounting would effectively result in the duplication of
deductions. Cf. Western Cas. & Sur. Co. v. Commissioner, 571
F.2d 514, 519 (10th Cir. 1978), affg. 65 T.C. 897 (1976).
The courts have repeatedly held that a change in method of
accounting subject to section 481 results where a taxpayer is
required to cease a practice of improperly reducing gross
receipts by amounts allocable to a reserve for estimated losses
or contingent liabilities. Knight-Ridder Newspapers, Inc. v.
United States, supra; North Cent. Life Ins. Co. v. Commissioner,
92 T.C. 254 (1989); Copy Data, Inc. v. Commissioner, 91 T.C. 26
(1988); Klimate Master, Inc. v. Commissioner, T.C. Memo. 1981-
292. In substance, the cases at hand present the same issue and
they require the same result.
Petitioners correctly cite a number of our decisions for the
proposition that correction of practices under which a taxpayer
improperly excluded items from gross income does not necessarily
constitute a change in method of accounting or may not otherwise
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