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(concerning sales of computer software by the developer of the
software and taking into account that “cash method of accounting
is not appropriate for petitioner because it generates
substantial amounts of receivables or deferrals of revenue as
evidenced by the difference between its software income for tax
and financial purposes.”); Silberman v. Commissioner, T.C. Memo.
1983-782 (cash receipts and disbursements method of accounting
could not be used by a movie production partnership because the
predicted delay between expenditures and receipts created a
mismatching of funds and a distortion of income), affd. without
published opinions sub nom. Appeal of David Whin, Inc., Appeal of
Giordano, Appeal of Malanka, Stamato v. Commissioner, 770 F.2d
1068, 1069, 1072, 1075 (3d Cir. 1985). In Oakcross Vineyards
Ltd., we also pointed out that the question of whether a
taxpayer’s method of accounting materially distorts or clearly
reflects income is one of fact and is to be resolved on a
case-by-case basis.
As previously stated, where the Commissioner has determined
that a taxpayer’s method of accounting does not clearly reflect
income, the taxpayer must demonstrate either that his method of
accounting clearly reflects income or that the Commissioner’s
method does not clearly reflect income. Respondent’s explanation
of the net adjustment in the notice is broader than the ground he
relies on in the answer. That narrowing of his ground in the
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