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sections 1.461-1(a)(2)(i) and 1.167(a)-10(b), Income Tax Regs.
Where the taxpayer has used a method of accounting that does not
clearly reflect income, the Commissioner has considerable
discretion to determine a method clearly reflecting income that
the taxpayer must use. See sec. 446(b); Thomas v. Commissioner,
92 T.C. 206, 220 (1989). The Commissioner has broad discretion
in determining whether a method of accounting clearly reflects
income. See Commissioner v. Hansen, 360 U.S. at 447.
Petitioners have offered no evidence of the actual
commencement dates of the policies obtained from Western General
during the years at issue or otherwise shown error in
respondent’s determination that such policies were obtained on a
ratable basis. Therefore we sustain respondent’s determination
that petitioners must amortize their insurance expenses on the
basis that such expenses were incurred ratably during the years
in issue.
To reflect the foregoing,
Decisions will be entered
for respondent.
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