- 22 -
clearly reflects income. If the Commissioner concludes
that the taxpayer's chosen method does not meet this
standard, he has the further discretion to require that
computations be made under the method which, in his
opinion, does clearly reflect income. It would be
difficult to describe administrative discretion in
broader terms.
Id. at 847.
Notwithstanding the authority conferred under section
446(b), the Commissioner cannot require a taxpayer to change to
another method where the taxpayer's method of accounting does
clearly reflect income, even if the method proposed by the
Commissioner more clearly reflects income. Ford Motor Co. v.
Commissioner, 71 F.3d 209, 213 (6th Cir. 1995), affg. 102 T.C. 87
(1994); Ansley-Sheppard-Burgess Co. v. Commissioner, 104 T.C.
367, 371 (1995); Hospital Corp. of America v. Commissioner, T.C.
Memo. 1996-105. Nor will the courts approve the Commissioner's
change of a taxpayer's accounting method from an incorrect method
to another incorrect method. Harden v. Commissioner, 223 F.2d
418, 421 (10th Cir. 1955), revg. 21 T.C. 781 (1954); Prabel v.
Commissioner, 91 T.C. 1101, 1112 (1988), affd. 882 F.2d 820 (3d
Cir. 1989); see also Southern California Sav. & Loan v.
Commissioner, 95 T.C. 35, 44 (1990) (Wells, J., concurring)
("Section 446(b) authorizes respondent to require accounting
changes that produce clearer reflections of income, not greater
distortions of income"). Therefore, in order to prevail in a
case where the Commissioner determines that a taxpayer's method
of accounting does not clearly reflect income, the taxpayer must
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