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a method of accounting clearly reflects income and, if not, to
direct the taxpayer to adopt an alternative method of accounting.
See sec. 446(b); United States v. Catto, 384 U.S. 102, 114 & n.22
(1966); Commissioner v. Hansen, 360 U.S. 446, 468 & n.12 (1959).
Section 446 imposes a heavy burden on a taxpayer disputing
the Commissioner’s determination on accounting matters. See Thor
Power Tool Co. v. Commissioner, 439 U.S. 522, 532-533 (1979). We
review the Commissioner’s exercise of authority under section
446(b) for abuse of discretion. See Ford Motor Co. v.
Commissioner, 102 T.C. 87, 91 (1994), affd. 71 F.3d 209 (6th Cir.
1995). The Commissioner’s determination is entitled to more than
the usual presumption of correctness. See id. and cases cited
therein. Whether an abuse of discretion has occurred depends
upon whether the Commissioner’s determination is without sound
basis in fact or law. See Ansley-Sheppard-Burgess Co. v.
Commissioner, 104 T.C. 367, 371 (1995). To prevail, a taxpayer
must establish that the Commissioner’s determination was “clearly
unlawful” or “plainly arbitrary”. Id. at 370.
Section 1.471-1, Income Tax Regs., 25 Fed. Reg. 11724 (Nov.
26, 1960), provides that a taxpayer must use inventories “in
every case in which the production, purchase, or sale of
merchandise is an income-producing factor.” Section 1.446-
1(c)(2)(i), Income Tax Regs., provides that a taxpayer using
inventories generally must use the accrual method of accounting.
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