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However, notwithstanding the breadth of these definitions,
the regulations also offer the following caveat: “Although a
method of accounting may exist under this definition without the
necessity of a pattern of consistent treatment of an item, in
most instances a method of accounting is not established for an
item without such consistent treatment.” Id. Moreover, the
regulatory text details certain types of adjustments, with
examples thereof, that are specifically excluded from
characterization as changes in accounting method:
A change in method of accounting does not include
correction of mathematical or posting errors, or errors
in the computation of tax liability (such as errors in
computation of the foreign tax credit, net operating
loss, percentage depletion or investment credit).
Also, a change in method of accounting does not include
adjustment of any item of income or deduction which
does not involve the proper time for the inclusion of
the item of income or the taking of a deduction. For
example, corrections of items that are deducted as
interest or salary, but which are in fact payments of
dividends, and of items that are deducted as business
expenses, but which are in fact personal expenses, are
not changes in method of accounting. In addition, a
change in the method of accounting does not include an
adjustment with respect to the addition to a reserve
for bad debts or an adjustment in the useful life of a
depreciable asset. Although such adjustments may
involve the question of the proper time for the taking
of a deduction, such items are traditionally corrected
by adjustments in the current and future years. * * * A
change in the method of accounting also does not
include a change in treatment resulting from a change
in underlying facts. On the other hand, for example, a
correction to require depreciation in lieu of a
deduction for the cost of a class of depreciable assets
which had been consistently treated as an expense in
the year of purchase involves the question of the
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