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required to maintain inventories because the Court found that
the sand and gravel were merchandise and an income-producing
factor in the taxpayer’s business. The taxpayer was required
to report its taxable income on the accrual method of
accounting. The Court held that the Commissioner did not abuse
his discretion under section 446 when the Commissioner required
the taxpayer to change from the cash method to the accrual
method of accounting. See id.
Petitioner’s purchases were substantial and represent
83 percent and 88 percent of its gross receipts in 1996 and
1997, respectively. Here, petitioner’s purchase of petroleum
products was substantial compared to its gross receipts and, as
such, those products are an income-producing factor in
petitioner’s business. Petitioner is required to use the
accrual method of accounting, unless it is able to establish
that the cash and accrual methods yield substantially identical
results.
Substantial Identity of Results
Petitioner argues that a substantial identity of results
exists between its cash method of accounting and the accrual
method of accounting selected by the Commissioner. Petitioner
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