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Petitioner next relies on another provision of the same
regulation, which states: “A change in method of accounting does
not include correction of mathematical or posting errors, or
errors in the computation of tax liability”. Sec. 1.446-
1(e)(2)(ii)(b), Income Tax Regs. Petitioner argues that the
accounting treatment of the deposits was not a method of
accounting but mere error, relying on Korn Indus., Inc. v. United
States, 209 Ct. Cl. 559, 532 F.2d 1352 (1976). In Korn Indus.,
the taxpayer manufactured furniture. The taxpayer used separate
inventories for raw materials, work-in-process, supplies, and
finished goods. There were 14 kinds of material in the finished
furniture; e.g., lumber, mirrors, glue, nails. During the years
in issue, 3 of the 14 materials costs had not been included in
the finished goods inventory, although they were included in the
other three inventories. When the taxpayer later took account of
the three materials costs, the Government claimed there was a
change in accounting method, but the court found that the
taxpayer had merely corrected an error. In the instant case,
petitioner’s “mistakes” are much more egregious and of a
different nature. In 1992, petitioner reported gross receipts
from his business as a bail bondsman of $80,456, and increased
the balances in his three accounts by a combined total of
$90,727. In 1993, petitioner reported gross receipts from his
business as a bail bondsman of $100,467 and increased the
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