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Before a taxpayer could change the taxpayer's method of
accounting, the taxpayer needed to secure the consent of the
Secretary. See sec. 446(e).
(ii)(a) A change in the method of accounting
includes a change in the overall plan of accounting for
gross income or deductions or a change in the treatment
of any material item used in such overall plan. * * *
A material item is any item which involves the proper
time for the inclusion of the item in income or the
taking of a deduction. * * * [Sec. 1.446-
1(e)(2)(ii)(a), Income Tax Regs.]
An accounting practice that involves the timing of when an
item is included in income or when it is deducted is considered a
method of accounting. See Knight-Ridder Newspapers, Inc. v.
United States, 743 F.2d 781, 797-798 (11th Cir. 1984); Diebold,
Inc. v. United States, 16 Cl. Ct. 193, 198-199 (1989), affd. 891
F.2d 1579 (Fed. Cir. 1989).
B. Analysis
Respondent argues that the matching rule contained in
section 1.1502-13(b)(2), Income Tax Regs., is a method of
accounting because the rule affects the timing (i.e.,
recognition) of corresponding items of income and deduction.
This Court has previously addressed the issue of whether the
consolidated return regulations are a method of accounting. In
Henry C. Beck Builders, Inc. v. Commissioner, 41 T.C. 616 (1964)
(Henry C. Beck Builders, Inc.), a Court-reviewed opinion, we
refused to accept the IRS's argument that the application of the
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