24
Petitioner's reliance on that regulation is misplaced. An
accounting method that conforms with GAAP does not necessarily
clearly reflect income for tax purposes because tax and financial
accounting have different objectives; "a presumptive equivalency
between tax and financial accounting would create insurmountable
difficulties of tax administration." Thor Power Tool Co. v.
Commissioner, 439 U.S. at 540-544; see American Auto. Association
v. United States, 367 U.S. at 693 (accounting that accords with
generally accepted accounting principles is not necessarily
binding on the Treasury). In Schlude v. Commissioner, 372 U.S.
at 134, the Supreme Court held that a method of accounting
similar to petitioner's method did not clearly reflect income
despite unrebutted expert testimony that the taxpayer's method
clearly reflected income under financial accounting principles
and that those principles were followed. This case is
indistinguishable from Schlude, American Auto. Association, and
S. Garber, Inc. v. Commissioner, 51 T.C. 733 (1969).
As in Schlude and American Auto. Association, petitioner
does not prevail despite petitioner's experts' conclusions about
petitioner's accounting method. Thus, for the reasons stated in
paragraph II-B, above, Eagle may not defer reporting customer
deposits in income in the year it received them unless it
qualifies under section 1.451-5, Income Tax Regs., discussed
next.
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