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Petitioner also makes a second argument that the cost
recovery method is the proper method for reporting gain from the
sales of land. In this regard, petitioner notes that the Wangs
and respondent used the cost recovery method to compute the
income contained in the 1979 closing agreement. Petitioner
contends that both parties are now bound by the 1979 closing
agreement to use the cost recovery method.
Respondent answers that EIC and petitioner failed to file a
Form 3115 when changing from the installment method to the cost
recovery method used in the amended income tax returns. Tax-
payers are required to use this form in requesting the Commis-
sioner's consent to changes in accounting methods. Sec.
1.446-1(e)(3)(i), Income Tax Regs.; Rev. Proc. 84-74, 1984-2 C.B.
736. Respondent asserts that petitioners' failure to follow
established procedures is sufficient to deny their attempt to
change accounting methods. We agree. See Witte v. Commissioner,
513 F.2d 391 (D.C. Cir. 1975), revg. in part and remanding T.C.
Memo. 1972-232.
Petitioner argues, however, that the use of the cost
recovery method is mandated by the 1979 Closing Agreement,
thereby obviating the need to file a Form 3115 and requesting the
Commissioner's consent. The facts do not support petitioner's
contentions.
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