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September 30, 1990, of $98,314, and an accuracy-related penalty
under section 66621 of $24,851.
After concessions by the parties, the issues for decision
are: (1) Whether respondent's determination that petitioner must
account for inventories and use the accrual method of accounting
(accrual method) was an abuse of discretion. We hold it was not.
(2) Whether petitioner is liable for the section 6662 accuracy-
related penalty for a substantial understatement of income tax
for 1990. We hold it is not.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulated facts and the accompanying exhibits are
incorporated into our findings by this reference. At the time
the petition in this case was filed, petitioner's principal place
of business was located in Alpharetta, Georgia. Petitioner is a
corporation owned by a sole shareholder, Terrell Barden (Barden).
Petitioner files its Federal income tax return using a fiscal
year ending September 30.
At its inception in 1983, petitioner began using the cash
method of accounting (cash method). Then, in 1987, petitioner
began keeping its books and records on the accrual method.
1 Unless otherwise noted, all section references are to the
Internal Revenue Code in effect for the taxable year in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure, unless otherwise indicated. All dollar amounts
are rounded to the nearest dollar.
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