- 35 -
of reviewing the effects of petitioner’s recharacterization, such
as adjusting for claimed depreciation, would defeat the
accounting goal of promoting uniformity, to say nothing of the
complex computations and inconvenience in administering the tax
laws. Petitioner’s attempted recharacterization is precisely the
type of change which frustrates the purpose of section 446(e) and
renders the consent requirement necessary.
V. Conclusion
Petitioner consistently used a method of accounting of
following regulatory rules and guidelines for regulatory,
financial, and tax reporting purposes for the expenditures in
issue. Petitioner’s attempt to alter its classification of the
expenditures changes the timing of deductions related to those
expenditures and thus is a change in the treatment of a material
item. This change in treatment of a material item does not
result from a correction or a change in underlying facts.
Petitioner did not seek respondent’s consent, nor did respondent
impliedly consent or waive the right to challenge petitioner’s
recharacterization as an impermissible change of accounting
method. Petitioner’s claimed recharacterization frustrates the
purpose of section 446(e). Accordingly, we hold that
petitioner’s attempted recharacterization of the expenditures in
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