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installment method to report income for tax purposes from the
sales of land. In the notices of deficiency issued to EIC for
the taxable years 1989 through 1992, and to the Wangs for 1990,
respondent determined that the installment method was an imper-
missible method of accounting for tax purposes, and determined
that the accrual method was one that clearly reflected income.
Petitioner and EIC argue that the installment method is proper,
and therefore respondent improperly changed their accounting
method from one that clearly reflected income.
Section 446(a) requires a taxpayer to compute taxable income
under the method of accounting it regularly uses in keeping its
books. Section 446(b), however, provides that, if the method of
accounting regularly utilized by the taxpayer does not clearly
reflect taxable income, the computation of taxable income shall
be made under such method as, in the Commissioner's opinion, does
clearly reflect income. The Commissioner's authority under
section 446(b) reaches not only overall methods of accounting but
also a taxpayer's method of accounting for specific items of
income and expense. Ford Motor Co. v. Commissioner, 102 T.C. 87,
100 (1994), affd. 71 F.3d 209 (6th Cir. 1995); sec. 1.446-1(a),
Income Tax Regs.
It is well recognized that section 446 grants the Commis-
sioner broad discretion in matters of accounting and gives the
Commissioner wide latitude to adjust a taxpayer's method of
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