- 14 -
1997. Total income under the accrual method of accounting
would be $343,704 for the year ended June 30, 1996, and
$339,748 for the year ended June 30, 1997. Thus, a change in
accounting method from the cash method to the accrual method
would yield a decrease in total income of $11,787, or
approximately 3.4 percent, for the year ended June 30, 1996,
and an increase in total income of $75,448, or approximately
22.2 percent, for the year ended June 30, 1997.
Petitioner’s taxable income for the year ended June 30,
1996, under the cash method of accounting was income of $20,649
and under the accrual method of accounting would be a loss of
$6,759, and a change in the method of accounting would yield a
decrease in taxable income of $27,408. Petitioner’s taxable
income for the year ended June 30, 1997, under the cash method
of accounting was a loss of $16,340 and under the accrual
method of accounting would be income of $59,108, and a change
in the method of accounting would yield an increase in taxable
income of $75,448. Consistent with the cases that have been
decided on this issue, we conclude that the cash method and the
accrual method of accounting do not produce substantially
identical results.
Section 448
Petitioner considers itself a small business that is a
“mom-and-pop” operation. Petitioner has used the cash method
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