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for its taxable year ended May 31, 1995 (1995 taxable year).1 We
must decide whether respondent abused his discretion under
section 446 when he determined that Diehl must change its overall
method of accounting from a hybrid method to an accrual method.
We hold he did not. Unless otherwise indicated, section
references are to the Internal Revenue Code in effect for the
subject year.
FINDINGS OF FACT
Some facts were stipulated and are so found. The stipulated
facts and the exhibits submitted therewith are incorporated
herein by this reference. Diehl is a publicly traded corporation
whose principal place of business was in Columbia, Maryland, when
its petition was filed.
Diehl designs, develops, manufactures, and sells unmodified
software that allows sophisticated design and engineering
projects to be performed on computer hardware. Diehl also
develops and sells to its software users, usually as part of the
software sale, three manuals which are an integral part of the
software. The manuals, which are printed and bound by outside
vendors, consist of a: (1) Programming language manual, (2)
technical reference manual, and (3) tutorial manual. Diehl also
sells to its customers software produced by third parties. (We
1 Respondent also determined that Diehl is liable for the
increased rate of interest under sec. 6621(c).
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