- 35 -
since time immemorial.'" Ansley-Sheppard-Burgess Co. v.
Commissioner, 104 T.C. 367, 375 (1995) (quoting Magnon v.
Commissioner, 73 T.C. 980, 1004 (1980)); see also Magnon v.
Commissioner, supra at 1004-1006 (use of cash method of
accounting by electrical contractor held to clearly reflect
income); National Builders, Inc. v. Commissioner, 12 T.C. 852,
858-859 (1949) (Court reviewed) (Court found that cash method of
accounting clearly reflected taxpayer's income and rejected
Commissioner's determination that construction contractor use
hybrid method of accounting instead of cash method); C.A. Hunt
Engg. Co. v. Commissioner, T.C. Memo. 1956-248 (use of the cash
method of receipts and disbursements held to reflect income
clearly). Thus, it is clear that the construction industry
practice of using the cash method of accounting has long been
accepted by this Court.
Respondent argues that petitioner must use an inventory
method of accounting to clearly reflect its income because it
sells merchandise. We have found that the materials used by
petitioner are not merchandise. Respondent did not assert that
petitioner attempted to unreasonably prepay expenses or purchase
supplies in advance, and the evidence shows the contrary.11 See
11Petitioner received the invoices from the suppliers within
30 days of the delivery of the materials to the developer's
construction site. Petitioner also received within 30 days of
the provision of its services a check from the developer, made to
petitioner and the supplier as joint payees, for payment of the
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011