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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
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