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amounts upon which respondent's adjustments are based.
Further, petitioner's bookkeeper computed the payables by
totaling bills that were due. The payables did not include
expenses that may have properly accrued under the regulations
but for which petitioner had not yet been billed.
Additionally, "No method of accounting will be regarded as
clearly reflecting income unless all items of gross profit and
deductions are treated with consistency from year to year."
Sec. 1.446-1(c)(2)(ii), Income Tax Regs. In this case,
respondent did not treat petitioner's accounts payable with
consistency. The accounts payable of $98,584 at the beginning
of the taxable year included all accounts payable ($86,334)
plus all salaries and wages payable ($12,500) reflected on the
balance sheet for the taxable year ending May 31, 1990. The
accounts payable of $20,120 for the close of the taxable year
included only those payables identified as payables related to
the cost of goods sold and did not include $5,111 in accounts
payable not related to the cost of goods sold or $11,250 in
salaries and wages payable to Mr. Asher. Respondent made no
adjustments to account for accounts payable at the end of the
taxable year related to the $5,111 of operating expenses or
related to the $11,250 of salaries and wages payable.
Respondent's adjustment of these items was improper. In order
to clearly reflect petitioner's income, accounts payable at the
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