- 31 -
In addition, consent is required when a taxpayer,
in a court proceeding, retroactively attempts to alter
the manner in which he accounted for an item on his tax
return. If the alteration constitutes a change in the
taxpayer's method of accounting, the taxpayer cannot
prevail if consent for the change has not been secured.
* * * [10]
The failure of the Commissioner previously to object to the
taxpayer’s accounting method will not stop him from later
challenging it. See Niles Bement Pond Co. v. United States, 281
U.S. 357, 362 (1930); Fort Howard Paper Co. v. Commissioner, 49
T.C. 275, 284 (1967); Hotel Kingkade v. Commissioner, 12 T.C.
561, 568-569 (1949), affd. 180 F.2d 310 (10th Cir. 1950). While
the Commissioner’s acquiescence in the taxpayer’s use of an
accounting method is not binding on the Commissioner, it may be a
factor in the taxpayer’s favor. See Public Serv. Co. v.
Commissioner, 78 T.C. 445, 456 (1982); Geometric Stamping Co. v.
Commissioner, 26 T.C. 301, 304-305 (1956).
In the instant case, respondent allowed petitioner certain
additional repair expense deductions related to Florida Power.
Respondent did not question petitioner’s method of accounting or
assert that any impermissible change was being made. Rather,
10In Summit Sheet Metal Co. v. Commissioner, T.C. Memo.
1996-563, we relied on Southern Pac. Transp. Co. v. Commissioner,
75 T.C. 497 (1980), supplemented by 82 T.C. 122 (1984), in
drawing a negative inference against the taxpayer who did not
seek to change the treatment of an item on its original tax
return or on an amended return, but rather waited until after the
Commissioner’s audit and after the commencement of court
proceedings.
Page: Previous 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 NextLast modified: May 25, 2011