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characterizations that Florida Power used for regulatory and
financial reporting purposes. Accordingly, we hold that the
audit adjustments by respondent do not establish the method of
accounting that petitioner is claiming.
Petitioner’s treatment of the expenditures in issue for tax
purposes was consistent with the treatment of those expenditures
by Florida Power for regulatory accounting and financial
reporting purposes. The Schedules M-1 adjustments are, at best,
relatively minor deviations from petitioner’s method of
accounting. The Schedules M-1 adjustments for the PRA and the
storm reserve, and the audit adjustments by respondent, do not
change the fact that petitioner is retroactively attempting to
recharacterize expenditures that it regularly and consistently
capitalized for regulatory, financial, and tax reporting
purposes. See Potter v. Commissioner, 44 T.C. 159, 167 (1965)
(methods of accounting must be regular and consistent).
II. Correction
A change in method of accounting does not occur when a
taxpayer seeks to correct mathematical or posting errors, errors
in the computation of tax liability, a change in treatment
arising from a change in underlying facts, or any other
“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.” Northern States Power Co. v.
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