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The taxpayer bears the burden of proving there has been an
abuse of discretion by the Commissioner. Asphalt Prods. Co. v.
Commissioner, 796 F.2d 843, 848 (6th Cir. 1986), affg. on this
issue Akers v. Commissioner, T.C. Memo. 1984-208, revd.
on another issue 482 U.S. 117 (1987). Taxpayers must show that
the Commissioner’s action was arbitrary, capricious, or without
sound basis in fact. Capitol Fed. Sav. & Loan Association & Sub.
v. Commissioner, 96 T.C. 204, 213 (1991); Buzzetta Constr. Corp.
v. Commissioner, 92 T.C. 641, 648 (1989); Mailman v.
Commissioner, 91 T.C. 1079, 1084 (1988); Pulver Roofing Co. v.
Commissioner, 70 T.C. 1001, 1011 (1978). Petitioner has not made
that showing; there is no evidence that respondent's
determination was arbitrary.
Petitioner contends that its total income for its 1988 to
1993 taxable years was about the same under the cash and accrual
methods of accounting. Petitioner contends that from 1988 to
1993 under the cash method of accounting its total sales were
$25,523,854, taxable income was $1,157,437, and income tax was
$375,940. Petitioner also contends that from 1988 to 1993 under
the accrual method of accounting its total sales were
$25,573,570, income before taxes was $1,084,420, and its
estimated income tax was $361,618. These comparisons do not
establish that respondent committed an abuse of discretion.
Petitioner must use the accrual method of accounting and
inventories because merchandise is a material income-producing
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