- 36 -
Ansley-Sheppard-Burgess Co. v. Commissioner, supra at 374; Van
Raden v. Commissioner, 71 T.C. 1083, 1104 (1979), affd. 650 F.2d
1046 (9th Cir. 1981).
It is irrelevant that the amount of taxable income that
petitioner reported using the cash method of accounting is not
the same amount that it would have reported if it used the
accrual method. We previously have held that where a taxpayer is
a "small" corporation permitted to use the cash method under
section 448(b)(3),12 is not required to maintain an inventory,
invoices, which petitioner forwarded to the supplier. Under the
cash method of accounting, petitioner deducted the cost of the
expense of the already consumed materials when paid, and recorded
as income the payment when received. Thus, petitioner's method
of accounting matched the receipt of the payment for the material
with the deduction for the expense. Cf. Knight-Ridder
Newspapers, Inc. v. United States, 743 F.2d 781, 792 (11th Cir.
1984) (inventories of paper and ink deducted at time of purchase,
rather than at time of use); Wilkinson-Beane, Inc. v.
Commissioner, 420 F.2d 352, 353-354 (1st Cir. 1970), affg. T.C.
Memo. 1969-79 (cost of caskets held for long periods of time,
some for more than one year, deducted during year in which
taxpayer paid for them); J.P. Sheahan Associates, Inc. v.
Commissioner, T.C. Memo. 1992-239 (cost of material deducted in
year of purchase, not at time of use). Therefore, we cannot find
that petitioner accounted for the cost of the materials
incorrectly.
12Sec. 448 provides in pertinent part:
SEC. 448. LIMITATIONS ON USE OF CASH METHOD OF ACCOUNTING.
(a) General Rule.--Except as otherwise provided in this
section, in the case of a--
(1) C corporation,
(2) partnership which has a C corporation as a partner,
or
(3) tax shelter,
taxable income shall not be computed under the cash receipts
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