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all materials in 1992, but petitioner did not receive a check
from the customer until February 1993. However, the project was
completed in October 1992, and the delay in payment was beyond
petitioner’s control.
Petitioner made no attempt to defer income to a later year,
and there were no prepayments of expenses. Business decisions
were made on the basis of the cash method financial records, even
though the completed contract records were available.
In the notice of deficiency, respondent determined that
petitioner was required to use an accrual method of accounting.
By amendment to answer and stipulation of the parties, the
parties agree that if petitioner was not entitled to use the cash
method of accounting, then petitioner will elect to use, and
respondent will allow the use of, the completed contract method
of accounting.3
3 The parties further stipulate that under the completed
contract method of accounting, petitioner’s income for the
taxable year 1992 would be $433,862, which would result in a
current year adjustment of $385,755 (after consideration of
$48,107 in income reported on the cash basis) and adjustment
required to be taken into account in 1992 under sec. 481 of
$1,005,077. Thus, the total increase in petitioner’s taxable
income for 1992 would be $1,390,832.
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