Toyota Town, Inc. - Page 17





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          contend, distorts income because it limits the deduction of the             
          expense associated with an EWA to a partial year’s portion when a           
          full year’s portion of associated income must be recognized                 
          pursuant to Rev. Proc. 92-98, supra.  Petitioners summarize their           
          argument as follows:                                                        
                    Because petitioner’s method of accounting is an                   
               acceptable method which clearly reflects its income,                   
               Respondent is not allowed to require petitioner to                     
               change its method of accounting.  Prabel v.                            
               Commissioner, * * *  [91 T.C. 1101, 1112 (1988), affd.                 
               882 F.3d 880 (3d Cir. 1989)]; Hallmark Cards, Inc. v.                  
               Commissioner, * * * [90 T.C. 26, 31 (1988)].  To force                 
               a change from a method which clearly reflects                          
               excessive[10] income to a method which materially                      
               distorts income, is an abuse of discretion.  Molsen v.                 
               Commissioner, 85 T.C. 485, 498, 509 (1985). * * *                      
               Petitioners’ position, in effect, is that they may report              
          their income from EWA’s in accordance with the provisions of Rev.           
          Proc. 92-98, supra, but with respect to the computation of                  
          deductions arising from EWA transactions, they are free to                  
          disregard the method outlined in Rev. Proc. 92-97, 1992-2 C.B.              
          510, and devise a method that more closely matches the income and           
          expense associated with the qualified advance payment amount.               
               Petitioners are wrong, for at least two reasons.  First, it            
          is not an abuse of discretion for the Commissioner to establish             


               10 Petitioners’ reference to “excessive” income is                     
          apparently an allusion to their belief that the imputed income              
          required to be recognized under Rev. Proc. 92-98, 1992-2 C.B.               
          512, is not appropriate.                                                    






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