- 24 -
In Asphalt Prods. Co. v. Commissioner, supra at 849, the
court noted that an insignificant increase in inventories may be
grounds for finding an abuse of discretion by the Commissioner.
However, the court found no such abuse of discretion in that case
given the size of the taxpayer's receivables combined with its
failure to account for inventories. Id. See also Thompson
Elec., Inc. v. Commissioner, supra (cash method did not produce
substantial identity of results where for 1988 and 1989,
petitioner's taxable income computed under the cash method was
$138,418 and $135,958, respectively, while taxable income
computed under the accrual method was $331,925 and $289,039,
respectively); Surtronics, Inc. v. Commissioner, supra (cash
method did not produce substantially identical results to the
accrual method, where the difference in net income for the period
involved was $198,000).
For fiscal year 1990, petitioner's taxable income under the
cash method of accounting was $54,128. Petitioner's taxable
income under the accrual method of accounting would be $328,549.
Thus, petitioner's taxable income under the accrual method
increased by $274,421 for the taxable year in issue. This
difference is not inconsequential; the two methods do not produce
substantially identical results. Thompson Elec., Inc. v.
Commissioner, supra; J. P. Sheahan Associates, Inc. v.
Commissioner, supra.
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