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accounting. See Hitachi Sales Corp. of Am. v. Commissioner, T.C.
Memo. 1994-159, supplemented by T.C. Memo. 1995-84.
"If there has been a change in method of accounting, then
section 481 comes into operation and adjustments necessary to
prevent an omission of taxable income must be made." Primo Pants
Co. v. Commissioner, supra at 720 (emphasis added). Once the
Commissioner changes the taxpayer's method of accounting in
regard to inventories, "that change of accounting method triggers
the adjustments of section 481. If any amounts are omitted from
taxable income because of a change in method of accounting, then
section 481 mandates adjustments to prevent these omissions."
Id. at 726 (emphasis added).
Where the statutory notice and pleadings are sufficient to
raise the issue of change in accounting method, the application
of section 481 is patent. See sec. 481(a); Primo Pants Co. v.
Commissioner, supra; Hitachi Sales Corp. of Am. v. Commissioner,
supra. Here, the statutory notice raised the issue of change in
accounting method;3 therefore, section 481 was triggered.4 See
3 The statutory notice contained the following language:
"Your gross income has been increased because of a change in
accounting method from the cash basis to accrual method."
4 Our recent Court-reviewed opinion in Shea v.
Commissioner, 112 T.C. ___ (1999), is distinguishable from the
case at bar. In Shea, we rejected the Commissioner's argument
that the Commissioner's basis was implicit in the notice of
deficiency and held that the notice of deficiency failed to
(continued...)
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