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After a concession by respondent,1 we must decide whether
respondent abused his discretion in determining that petitioner’s
use of the cash method of accounting did not clearly reflect
income. We hold that he did.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. We
incorporate by this reference the stipulation of facts and
attached exhibits. At the time of filing the petition,
petitioner was an Ohio corporation with its principal place of
business in Oakwood Village, Ohio.
Petitioner specialized in the construction of streets,
sidewalks, curbs, and similar improvements for governmental
entities. All of petitioner’s customers were governmental and
municipal agencies, including the State of Ohio and
municipalities within the State. Petitioner’s expertise was
construction, in particular laying concrete, on public sites such
as city streets and sidewalks that required the project to be
completed with a minimal amount of disruption in traffic flow and
in compliance with governmental regulations. Petitioner provided
labor and equipment,2 but petitioner did not maintain a supply of
any of the materials that were used at a construction site,
1 Respondent concedes that petitioner is not liable for the
accuracy-related penalty.
2 Occasionally petitioner rented equipment to third parties.
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