- 10 - 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. PetitionerPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011