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determination was not an abuse of discretion. Thus, we sustain
respondent’s determination that petitioners must report income on
the cash method of accounting.
Petitioners cite Hospital Corp. of Am. v. Commissioner, T.C.
Memo. 1996-105, for the proposition that taxpayers may use a
hybrid of cash and accrual methods. The facts of Hospital Corp.
of Am. v. Commissioner, supra, are distinguishable from those in
the instant case. In that case, we held that it was an abuse of
discretion for respondent to change the taxpayer’s method of
accounting because the taxpayer’s hybrid method clearly reflected
the taxpayer’s income. In the instant case, however, petitioners
impermissibly mixed cash and accrual methods of accounting in
violation of section 1.446-1(c)(1)(iv)(a), Income Tax Regs.
Petitioners contend that respondent’s disallowance of the
repairs expense for 1994 was an abuse of discretion because
petitioners have consistently used the same method of accounting
for more than 40 years. We disagree; respondent is not estopped
by petitioners’ prior treatment of petitioner’s logging income
and expenses. See Municipal Bond Corp. v. Commissioner, 41 T.C.
20, 32 (1963), revd. and remanded on other issues 341 F.2d 683
(8th Cir. 1965).
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