Von Euw & L.J. Nunes Trucking, Inc. - Page 8

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          fact.  See Ansley-Sheppard-Burgess Co. v. Commissioner, supra at            
          371; Ford Motor Co. v. Commissioner, 102 T.C. 87, 91-92, affd. 71           
          F.3d 209 (6th Cir. 1995).  The reviewing court's task is not to             
          determine whether, in its own opinion, the taxpayer's method of             
          accounting clearly reflects income but to determine whether there           
          is an adequate basis in law for the Commissioner's conclusion               
          that it does not.  See Ansley-Sheppard-Burgess Co. v.                       
          Commissioner, supra at 371.  Consequently, to prevail, a taxpayer           
          must prove that the Commissioner’s determination is arbitrary,              
          capricious, or without sound basis in fact or law.  See Ansley-             
          Sheppard-Burgess Co. v. Commissioner, supra at 371; Ford Motor              
          Co., supra at 92.                                                           
               To resolve this dispute, we consider sections 446 and 471              
          and the regulations thereunder.  Under section 446(a), a taxpayer           
          computes taxable income based on the method of accounting                   
          utilized by the taxpayer in keeping its books.  Section 446(c)              
          describes the various accounting methods that a taxpayer may use            
          in computing taxable income, including the cash and accrual                 
               Section 1.446-1(c)(2)(i), Income Tax Regs., provides that a            
          taxpayer who is required to use inventories must also use the               
          accrual method of accounting with regard to purchases and sales.            
          Under section 471 and section 1.471-1, Income Tax Regs., a                  
          taxpayer must account for inventories if the production,                    
          purchase, or sale of merchandise is an income-producing factor in           

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