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Held, further, P is not excepted from the UNICAP
rules by virtue of the artist exemption of sec.
263A(h), I.R.C.; none of P’s shareholders owns
“substantially all” of P’s stock within the meaning of
sec. 263A(h)(3)(D)(i)(I), I.R.C.
Held, further, the “year of change” for purposes
of sec. 481, I.R.C., is the subject year (i.e., the
year in which P’s method of accounting is changed to
conform to the UNICAP rules), rather than the first
year to which the UNICAP rules apply.
Richard A. Shaw and Bruce M. O’Brien (specially recognized),
for petitioner.
Christine V. Olsen, for respondent.
OPINION
LARO, Judge: This case is before the Court fully
stipulated. See Rule 122. Respondent determined a $131,077
deficiency in petitioner’s Federal income tax for its taxable
year ended June 30, 1994. We decide primarily whether petitioner
is subject to the uniform capitalization (UNICAP) rules of
section 263A. We hold it is. We also decide whether the subject
year is the “year of change” for purposes of section 481. We
hold it is. Unless otherwise indicated, section references are
to the Internal Revenue Code applicable to the subject year, and
Rule references are to the Tax Court Rules of Practice and
Procedure.
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