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meaning of sec. 1.471-1, Income Tax Regs.
Held, further, under the facts of this case, R abused
his discretion in determining that P must use the
accrual method of accounting to report its income for
Federal income tax purposes.
Kevin P. Courtney, for petitioner.
Steven Walker, for respondent.
PARR, Judge:* Respondent determined an $82,577 income tax
deficiency for petitioner's tax year ended August 31, 1994, and a
section 66621 accuracy-related penalty of $16,515.
The issues for determination are: (1) Whether the material
provided by petitioner in accordance with its contract to
construct and place concrete foundations, driveways, and walkways
is merchandise within the meaning of section 1.471-1, Income Tax
Regs. We hold it is not. (2) Whether respondent abused his
discretion in determining that petitioner's use of the cash
method of accounting did not clearly reflect its income. We hold
he did. (3) Whether petitioner is liable for an accuracy-related
penalty. Because of our disposition of the preceding issues, we
need not address this issue.
*This case was reassigned to Judge Carolyn Miller Parr by
order of the Chief Judge.
1Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year at issue.
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