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receipts and disbursements method; (2) an accrual method; (3) any
other method permitted by this chapter; or (4) any combination of
the foregoing methods permitted under regulations prescribed by
the Secretary.” Sec. 446(c). The regulations permit “any
combination of * * * [the cash, accrual, or other permissible]
methods of accounting * * * if such combination clearly reflects
income and is consistently used.” Sec. 1.446-1(c)(1)(iv), Income
Tax Regs. A method of accounting includes an overall method and
any specialized methods the taxpayer may use for individual
items. Burck v. Commissioner, 63 T.C. 556, 561 (1975), affd. 533
F.2d 768 (2d Cir. 1976); sec. 1.446-1(a), Income Tax Regs.
A taxpayer may adopt any permissible method of accounting on
the first income tax return on which an item appears. Once a
permissible method is chosen, the taxpayer must secure the
consent of the Secretary before adopting a new method. Sec.
446(e). A change in the method of accounting includes a change
in the overall plan of accounting or a change in the treatment of
any material item used in the overall plan. Sec. 1.446-
1(e)(2)(ii)(a), Income Tax Regs.
Petitioner contends that Mary Catherine has been using an
inventory method of accounting, including LCM, since Mary
Catherine’s inception. Respondent contends that real estate
developers are not entitled to use inventory methods of
accounting, such as LCM, for income tax purposes. Respondent
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