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are to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated.
After a concession,1 the issue for decision is: Whether
respondent's determination that petitioner must change from the
cash method of accounting to the accrual method of accounting was
an abuse of discretion. We hold it was.
Some of the facts have been stipulated and are so found.
The stipulated facts and the accompanying exhibits are
incorporated herein by this reference. At the time the petition
in this case was filed, petitioner's principal place of business
was located in Sandy, Oregon.
FINDINGS OF FACT
Petitioner is a corporation engaged in the business of
providing asphalt paving services. A sister corporation, Mt.
Hood Asphalt (Mt. Hood), manufactures asphalt. On an as-needed
basis, petitioner purchases asphalt from Mt. Hood at
approximately $19 per ton. Mt. Hood also sells asphalt to its
other customers at approximately $23 per ton.
When bidding on a contract or job, petitioner prices the
asphalt at cost. Since petitioner can generally purchase asphalt
at a lower cost, it has a competitive advantage over other paving
1 Respondent concedes a repairs expense adjustment for
1991 of $18,800 and related adjustments for depreciation expenses
for 1991, 1992, and 1993. In light of this concession, and
previously agreed adjustments set forth in the statutory notice
of deficiency, a Rule 155 computation is necessary.
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