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taxpayer must prorate insurance expenses, and no taxpayer
utilizing such a method has been afforded the treatment that
petitioner here requests.
As a result, consistency with case law negates the
possibility of a 1-year rule with respect to the accrual basis
taxpayer. It follows that petitioner’s deductions were improper
under the rules governing deductions and capitalization.
Clear Reflection of Income Rules
Section 446(b) provides: “If no method of accounting has
been regularly used by the taxpayer, or if the method used does
not clearly reflect income, the computation of taxable income
shall be made under such method as, in the opinion of the
Secretary, does clearly reflect income.” However, petitioner
acknowledges on brief that “The capitalization rules stand on
their own as does the clear reflection of income provision of
I.R.C. section 446(b).” Hence, because petitioner’s treatment of
license and insurance costs violated sections 162 and 263, we
need not reach the issue of whether petitioner’s method of tax
accounting also failed to clearly reflect income. The related
evidentiary objection raised by petitioner, contesting the
admissibility of financial data for years subsequent to 1993, is
likewise rendered moot. The challenged figures were offered only
on the question of clear reflection. Although petitioner asserts
that respondent abused his discretion in changing an accounting
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