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notwithstanding a finding that petitioner has inventory, and that
respondent's failure to authorize the use of the cash method is
an abuse of discretion.
In general, where a taxpayer has been required to maintain
inventories, it has been held that the taxpayer must use the
accrual method of accounting in accordance with the mandate of
section 1.446-1(c)(2)(i), Income Tax Regs. Herberger v.
Commissioner, 195 F.2d 293, 295 (9th Cir. 1952). However, the
courts have developed, in the context of accounting for
inventory, a substantial-identity-of-results test for determining
whether respondent abused his discretion in not affording the
taxpayer the opportunity to continue to use the cash method of
accounting under section 1.446-1(c)(2)(ii), Income Tax Regs.
Asphalt Prods. Co. v. Commissioner, 796 F.2d 843, 849 (6th Cir.
1986), affg. on this issue Akers v. Commissioner, T.C. Memo.
1984-208; Wilkinson-Beane, Inc. v. Commissioner, 420 F.2d at 356;
Ansley-Sheppard-Burgess Co. v. Commissioner, 104 T.C. at 377
(1995); Thompson Elec., Inc. v. Commissioner, T.C. Memo. 1995-
292; J. P. Sheahan Associates, Inc. v. Commissioner, T.C. Memo.
1992-239; Surtronics, Inc. v. Commissioner, T.C. Memo. 1985-277.
Whether the result under the cash method is substantially
identical with that under the accrual method is a question of
fact. E.g., Asphalt Prods. Co. v. Commissioner, supra;
Wilkinson-Beane, Inc. v. Commissioner, supra; Thompson Elec.,
Inc. v. Commissioner, supra.
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