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hybrid method) only because purchases and sales of inventory were
involved. Having concluded that petitioner did not purchase and
sell inventory, the majority has determined that respondent
abused his discretion in requiring petitioner to use the hybrid
method. Taxpayers should not read too much into that
determination.
As stated, although section 1.446-1(c)(2)(ii), Income Tax
Regs., leaves no doubt that respondent can so compel petitioner
if purchases and sales of inventory are involved, nothing in
section 446(b) prohibits the Secretary from so compelling
petitioner if purchases and sales of inventory are not involved.
Moreover, although section 446(c) specifically permits a taxpayer
to compute taxable income under the cash method, that permission
is made subject to the Secretary’s section 446(b) authority to
reject the taxpayer’s method of accounting. See sec. 446(c).
The legislative endorsement of the cash method undoubtedly means
that wages and salaries can be reported on the cash method. The
taxpayer in this case, however, is not a wage earner. Petitioner
is a corporation, with three physician-shareholder-employees,
three other physician-employees, numerous other employees, and,
for 1995, just shy of $3 million in receipts. For that year, it
paid officer compensation of $600,328 and other salaries and
wages of $630,381, for a total of just over $1.2 million. If the
value of the services provided by all six physicians employed by
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