- 16 -
Nothing in section 448 shall have any effect on
the application of any other provision of law that
would otherwise limit the use of the cash method, and
no inference shall be drawn from section 448 with
respect to the application of any such provision.
For example, nothing in section 448 affects * * * the
requirement of section 1.446-1(c)(2) that an accrual
method be used with regard to purchases and sales of
inventory. Similarly, nothing in section 448 affects
the authority of the Commissioner under section
446(b) to require the use of an accounting method
that clearly reflects income * * *
As discussed above, petitioner maintains inventories that
are an income-producing factor in petitioner’s business and is
required to use the accrual method of accounting. Thus,
section 1.446-1(c)(2), Income Tax Regs., which limits the use
of the cash method, overrides the exception under section 448
that allows certain corporations to use the cash method of
accounting. Similarly, section 448 does not affect the
Commissioner’s authority, under section 446(b), to require
petitioner to change from the cash method to the accrual method
of accounting.
Petitioner has failed to demonstrate that the
Commissioner’s determination was arbitrary, capricious, or
without sound basis in fact or law. We conclude that
respondent did not commit an abuse of discretion, under section
446, in determining that petitioner is required to change from
the cash method of accounting to the accrual method of
accounting. We have carefully considered all of the remaining
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