Cross Oil Company, Inc. - Page 6




                                        - 6 -                                         
          alternate method of accounting merely because the Commissioner              
          considers the alternate method to reflect more clearly the                  
          taxpayer’s income.  See Ansley-Sheppard-Burgess Co. v.                      
          Commissioner, supra at 371.                                                 
               The issue of whether the taxpayer’s method of accounting               
          clearly reflects income is a question of fact to be determined              
          on a case-by-case basis.  See id.; Ford Motor Co. v.                        
          Commissioner, 102 T.C. 87, 91-92 (1994), affd. 71 F.3d 209 (6th             
          Cir. 1995).  In reviewing the Commissioner’s determination that             
          the taxpayer’s method of accounting does not clearly reflect                
          income, the Court must determine whether there is an adequate               
          basis in law for the Commissioner’s conclusion.  See Ansley-                
          Sheppard-Burgess Co. v. Commissioner, supra at 371.                         
          Consequently, to prevail, a taxpayer must prove that the                    
          Commissioner’s determination was arbitrary, capricious, or                  
          without sound basis in fact or law.  See id.; Ford Motor Co. v.             
          Commissioner, supra at 91-92.                                               
               Respondent determined, pursuant to section 446, that                   
          petitioner was required to change from the cash method to the               
          accrual method of accounting for income tax purposes based on               
          respondent’s finding that petitioner’s purchase and resale of               
          petroleum products was an income-producing factor in                        
          petitioner’s business, and, thus, petitioner was required to                
          take inventories pursuant to section 1.471-1, Income Tax Regs.,             
          and was required to use the accrual method of accounting                    




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