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Section 446(b) vests the Commissioner with broad discretion
in determining whether a particular method of accounting clearly
reflects income. See Commissioner v. Hansen, 360 U.S. 446, 467
(1959); Knight-Ridder Newspapers, Inc. v. United States, 743
F.2d 781, 788 (11th Cir. 1984); Ansley-Sheppard-Burgess Co. v.
Commissioner, 104 T.C. 367, 370 (1995); RLC Indus. Co. v.
Commissioner, 98 T.C. 457, 491 (1992), affd. 58 F.3d 413 (9th
Cir. 1995). The Commissioner’s determination is entitled to
more than the usual presumption of correctness. See Ansley-
Sheppard-Burgess Co. v. Commissioner, supra at 370; RLC Indus.
Co. v. Commissioner, supra at 491. Accordingly, the
Commissioner’s interpretation of the “clear-reflection standard
[of section 446(b)] ‘should not be interfered with unless
clearly unlawful.’” Thor Power Tool Co. v. Commissioner, 439
U.S. 522, 532 (1979) (quoting Lucas v. American Code Co., 280
U.S. 445, 449 (1930)); see also Ansley-Sheppard-Burgess Co. v.
Commissioner, supra at 370.
The taxpayer bears “a ‘heavy burden of [proof],’” and the
Commissioner’s determination “is not to be set aside unless
shown to be ‘plainly arbitrary.’” Thor Power Tool Co. v.
Commissioner, supra at 532-533 (quoting Lucas v. Kansas City
Structural Steel Co., 281 U.S. 264, 271 (1930)). The
Commissioner may not, however, require a taxpayer to change from
an accounting method that clearly reflects income to an
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Last modified: May 25, 2011