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consistently used the cash method of accounting since its
incorporation, and has made no attempt to unreasonably prepay
expenses or purchase supplies in advance, the taxpayer is not
required to show a substantial identity of results between the
taxpayer’s method of accounting and the method selected by the
Commissioner. See Ansley-Sheppard-Burgess Co. v. Commissioner,
and disbursements method of accounting.
(b) Exceptions.--
* * * * * * * *
(3) Entities With Gross Receipts of Not More Than
$5,000,000.–-Paragraphs (1) and (2) of subsection (a) shall
not apply to any corporation or partnership for any taxable
year if, for all prior taxable years beginning after
December 31, 1985, such entity (or any predecessor) met the
$5,000,000 gross receipts test of subsection (c).
(c) $5,000,000 Gross Receipts Test.--For purposes of this
section--
(1) In General.–-A corporation or partnership meets the
$5,000,000 gross receipts test of this subsection for any
prior taxable year if the average annual gross receipts of
such entity for the 3-taxable-year period ending with such
prior taxable year does not exceed $5,000,000.
* * * * * * *
(3) Special Rules.–-For purposes of this subsection--
(A) Not In Existence For The Entire 3-Year Period.--If
the entity was not in existence for the entire 3-year period
referred to in paragraph (1), such paragraph shall be
applied on the basis of the period during which such entity
(or trade or business) was in existence.
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