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change in the treatment of any material item used in such overall
plan.” Sec. 1.446-1(e)(2)(ii)(a), Income Tax Regs. A material
item is defined as “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. When an
accounting practice does nothing more than postpone the reporting
of income, rather than permanently avoiding the reporting of
income over the taxpayer’s lifetime, it involves the proper time
for reporting income. See Wayne Bolt & Nut Co. v. Commissioner,
93 T.C. 500, 510 (1989). “[C]hange in method of accounting does
not include adjustment of any item of income or deduction which
does not involve the proper time for the inclusion of the item of
income or the taking of a deduction.” Sec. 1.446-1(e)(2)(ii)(b),
Income Tax Regs.
In Saline Sewer Co. v. Commissioner, T.C. Memo. 1992-236,
this Court held that, for purposes of section 446, a question of
whether collections should be reported in income is different
from a question as to the proper time when collections should be
reported in income. If a taxpayer seeks to change his prior
reporting position regarding whether a particular item is income
or not, a taxpayer is not required to seek the Secretary’s
permission before filing. Thus, section 446(e) is inapplicable
to the reporting of overrecoveries by Florida Power during the
years in issue.
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