- 4 -
Petitioner’s total income (i.e., gross income less cost of goods
sold) that was computed under the cash method and accrual method
of accounting, and the differences in amounts and differences as
percentages, are as follows:
Amount Percentage
Year Ended Cash Method Accrual MethodDifference Difference
June 30, 1996 $355,491 $343,704 ($11,787) (3.4)
June 30, 1997 264,300 339,748 75,448 22.2
Petitioner’s taxable income (i.e., total income less deductions)
that was computed under the cash method and accrual method of
accounting, and the differences in amounts, are as follows:
Amount
Year Ended Cash Method Accrual Method Differenc
e
June 30, $20,649 ($6,759) ($27,408)
1996
June 30, (16,340) 59,108 75,448
1997
Following an audit, the Commissioner sent a notice of
deficiency to petitioner that stated: “It is determined the
accrual method of accounting more clearly reflects income than
your current ‘Cash Basis’ method of accounting.”
OPINION
The issue presented is whether it was an abuse of
respondent’s discretion, under section 446, to require
petitioner to change from the cash method of accounting to the
accrual method of accounting in order to reflect clearly the
income of petitioner’s oil and gas business.
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