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After concessions, we must decide the following: (1) Whether
petitioner is required to recognize as income in the years in
issue amounts deposited into certain accounts as described below.
We hold that he is. (2) Whether recognition of the deposited
amounts in the year of deposit constitutes a change in accounting
method, requiring an adjustment to petitioner’s income under
section 481.1 We hold a section 481 adjustment is required.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. We
incorporate by this reference the stipulation of facts, the
supplemental stipulation of facts, and the attached exhibits. At
the time of filing the petition, petitioner resided in
Charleston, South Carolina.
Petitioner was a licensed professional bail bondsman, and
before trial he had been in the bonding business for more than 20
years. Petitioner conducted his bonding business as a sole
proprietorship. The proprietorship income was reported using the
accrual method of accounting. Petitioner wrote bonds for
criminal defendants to ensure their future appearance in court.
The bonds varied in amount and were set by the court. The
defendants, or someone on their behalf (collectively,
1 Unless otherwise noted, all section references are to the
Internal Revenue Code in effect for the years in issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
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