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determination that Smith Floors is required to use the accrual
method of accounting was an abuse of discretion.
We recognize that the cash method of accounting may result
in mismatching for income tax purposes when an expense is
incurred in one taxable period and the related income is not
realized until a later period. See RLC Indus. Co. v.
Commissioner, 98 T.C. 457, 493 (1992), affd. 58 F.3d 413 (9th
Cir. 1995). Nonetheless, some mismatching of income and expense
is tolerated under the law governing income tax accounting if the
taxpayer uses the cash method of accounting consistently and
makes no attempt to prepay expenses unreasonably or stockpile
supplies at the end of the taxable year. See Ansley-Sheppard-
Burgess Co. v. Commissioner, supra at 375; Van Raden v.
Commissioner, 71 T.C. 1083, 1104 (1979), affd. 650 F.2d 1046 (9th
Cir. 1981).
In the instant case, Smith Floors has consistently used the
cash method of accounting for tax purposes as permitted under
section 446(c). The cash method of accounting for tax purposes
is widely used throughout the contracting industry. See RACMP
Enters., Inc. v. Commissioner, supra at 232, and cases cited
therein. Furthermore, there is no evidence that Smith Floors
ever attempted to prepay expenses unreasonably or accumulate
excess supplies at the end of its taxable year. See RACMP
Enters., Inc. v. Commissioner, supra at 233; Ansley-Sheppard-
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