- 16 - The Notices of Deficiency Following an audit, respondent issued notices of deficiency to each of the petitioners in which respondent determined that they must use the accrual method. The notices of deficiency described respondent’s determination as follows: “It is determined the accrual method of accounting more clearly reflects income than your current ‘Cash Basis’ method of accounting.” OPINION Section 446(b) vests the Commissioner with broad discretion in determining whether a particular method of accounting clearly reflects income. See Knight-Ridder Newspapers, Inc. v. United States, 743 F.2d 781, 788 (11th Cir. 1984); Ansley-Sheppard- Burgess Co. v. Commissioner, 104 T.C. 367, 370 (1995); RLC Indus. Co. v. Commissioner, 98 T.C. 457, 491 (1992), affd. 58 F.3d 413 (9th Cir. 1995). The Commissioner's determination is entitled to more than the usual presumption of correctness. See Ansley- Sheppard-Burgess Co. v. Commissioner, supra; RLC Indus. Co. v. Commissioner, supra. Accordingly, the Commissioner's interpretation of the "clear-reflection standard [of section 446(b)] 'should not be interfered with unless clearly unlawful.'" Thor Power Tool Co. v. Commissioner, 439 U.S. 522, 532 (1979) (quoting Lucas v. American Code Co., 280 U.S. 445, 449 (1930)). The taxpayer bears "a 'heavy burden of * * * [proof],'" and the Commissioner's determination "is not to be set aside unless shownPage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011