- 13 -
as well as a change in the treatment of any material item. See
sec. 1.446-1(e)(2)(ii)(a), Income Tax Regs. A material item, in
turn, is explained by regulations as “any item which involves the
proper time for the inclusion of the item in income or the taking
of a deduction.” Id. This Court has also expounded that “When
an accounting practice merely postpones the reporting of income,
rather than permanently avoiding the reporting of income over the
taxpayer’s lifetime, it involves the proper time for reporting
income.” Wayne Bolt & Nut Co. v. Commissioner, 93 T.C. 500, 510
(1989).
In the case at bar, petitioner altered neither its overall
plan of accounting for income and deductions on an accrual basis
nor its basic system of accounting for depreciation using MACRS.
Petitioner is, however, seeking to switch from deducting the cost
of its gas station properties over a 31.5- or 39-year period on a
straight line basis to writing off these costs over a 15-year
term on a declining balance basis. Such involves the timing of
deductions, not the total amount of lifetime income, and would
thus appear at first blush to be a “material” difference
signaling a change in accounting method.
Yet regulations specifically provide that “a change in the
method of accounting does not include * * * an adjustment in the
useful life of a depreciable asset”, notwithstanding the fact
that “such adjustments may involve the question of the proper
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011