Von Euw & L.J. Nunes Trucking, Inc. - Page 7

                                        - 7 -                                         
               Under section 446,6 the Commissioner has broad powers to               
          determine whether an accounting method used by a taxpayer clearly           
          reflects income.  See Commissioner v. Hansen, 360 U.S. 446, 467             
          (1959); Ansley-Sheppard-Burgess Co. v. Commissioner, 104 T.C.               
          367, 370 (1995).  Courts do not interfere with the Commissioner’s           
          determination under section 446 unless it is clearly unlawful.              
          See Thor Power Tool Co. v. Commissioner, 439 U.S. 522, 532                  
          (1979); Cole v. Commissioner, 586 F.2d 747, 749 (9th Cir. 1978),            
          affg. 64 T.C. 1091 (1975); Ansley-Sheppard-Burgess Co., supra at            
               Whether respondent abused his discretion is a question of              

               6  Sec. 446 provides in pertinent part:                                
                    (a) General rule.--Taxable income shall be computed               
               under the method of accounting on the basis of which the               
               taxpayer regularly computes his income in keeping his books.           
                    (b) Exceptions.--If no method of accounting has been              
               regularly used by the taxpayer, or if the method used does             
               not clearly reflect income, the computation of taxable                 
               income shall be made under such method as, in the opinion of           
               the Secretary, does clearly reflect income.                            
                    (c) Permissible methods.--Subject to the provisions of            
               subsections (a) and (b), a taxpayer may compute taxable                
               income under any of the following methods of accounting--              
                         (1) the cash receipts and disbursements method;              
                         (2) an accrual method;                                       
                         (3) any other method permitted by this chapter; or           
                         (4) any combination of the foregoing methods                 
                    permitted under regulations prescribed by the                     

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: May 25, 2011