Addison Distribution, Inc. - Page 6

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            accounting method used by a taxpayer clearly reflects income.                                
            Commissioner v. Hansen, 360 U.S. 446, 467 (1959); Ansley-                                    
            Sheppard-Burgess Co. v. Commissioner, 104 T.C. 367, 370 (1995).                              
            The Commissioner, however, cannot require a taxpayer to change                               
            his method of accounting unless the Commissioner makes a                                     
            determination that the accounting method used by the taxpayer                                
            does not clearly reflect income.  See sec. 446(b); Asphalt Prods.                            
            Co. v. Commissioner, 796 F.2d 843, 848 (6th Cir. 1986), affg. in                             
            part, revg. in part and remanding Akers v. Commissioner, T.C.                                
            Memo. 1984-208, revd. on another issue 482 U.S. 117 (1987);                                  
            Hallmark Cards, Inc. & Subs. v. Commissioner, 90 T.C. 26, 31                                 
                  Section 1.446-1(c)(2)(i), Income Tax Regs., provides that a                            
            taxpayer who is required to use inventories must also use the                                
            accrual method of accounting with regard to purchases and sales.                             
            A taxpayer who is required to use inventories, and thereby the                               
            accrual method, violates the clear reflection of income                                      
            requirement by reporting purchases and sales under the cash                                  
            method.  See Asphalt Prods. Co. v. Commissioner, supra at 848.                               
                  AEI uses the cash method of accounting.  Respondent, in the                            
            notice of deficiency, determined that AEI is required to use                                 
            inventories.  Respondent's determination means that AEI's use of                             


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