- 6 -
taxable years 1988 through 1992 was not in accordance with
section 832(b)(4).
The notice of deficiency made various adjustments to
petitioner's income and "provision for reserves" deductions so as
to put petitioner on the method of accounting prescribed by
section 832(b)(4). The notice of deficiency made these changes
by determining a deficiency in the first open year, 1990. The
notice of deficiency does not take into account any net operating
losses which may have been generated by the 1993 taxable year.
The only remaining issue for consideration is which year, 1990 or
1993, is the year of change.3
Section 446(a) requires a taxpayer to compute his taxable
income using the method of accounting he uses to calculate his
income in keeping his books. Section 446(b) provides that "if
the method used does not clearly reflect income, the computation
of taxable income shall be made under such method as, in the
opinion of the Secretary, does clearly reflect income." When the
taxpayer's accounting method is changed, section 481(a) requires
that adjustments be made to the taxpayer's income "to prevent
amounts from being duplicated or omitted".
3 The stipulation of facts states that petitioner does not
agree that respondent properly applied sec. 481(b). Petitioner
does not argue that point on brief. Therefore, we treat
petitioner as having conceded the issue.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011