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reasonable conditions upon the use of an accounting method that
has been established administratively. Second, even disregarding
any authority of the Commissioner to impose conditions upon the
use of an administratively established accounting method,
petitioners are not entitled to use the amortization method they
have employed because it contravenes the regulations.
2. Reasonable Administrative Conditions
Petitioners describe the instant cases as ones where
respondent is attempting to “force” petitioners to change from a
method of accounting which clearly reflects income to one which
does not. We disagree with this characterization. Respondent
has not attempted to “force” a change in petitioners’ accounting
methods. Rather, the Commissioner, relying upon his authority
under section 446(b), administratively established in Rev. Proc.
92-98, supra, a method of accounting for certain prepaid services
income of accrual basis taxpayers engaged in the sale of
multiyear service warranty contracts for which third-party
insurance is obtained. Petitioners elected this method, which
permits deferral of a portion of the prepaid services income
(equal to the amount which is paid over to a third party to
assume the risk under the warranty contracts).
The Commissioner imposed certain conditions, however, upon a
taxpayer’s eligibility to elect the method provided in Rev. Proc.
92-98, supra, including specifically the requirement that an
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