-167-
correct this problem. The Court held that this correction was a
change in the method of accounting that, under section 481,
required the taxpayer to recapture in income the cost of items
mistakenly written off in prior years. Id. at 513. In Primo
Pants Co. v. Commissioner, supra, the taxpayer consistently
valued its inventories as a percentage of cost when its
inventories should have been valued at full cost. The Court held
that deferral of income until final closing inventory was
corrected was a timing question that constituted a change in
accounting method. Id. at 725; accord Dearborn Gage Co. v.
Commissioner, 48 T.C. 190, 197-198 (1967) (concluding that the
exclusion of overhead costs in valuing inventory is an erroneous
method of accounting involving a material item); Hitachi Sales
Corp. of Am. v. Commissioner, T.C. Memo. 1994-159 (a change from
an improper method of valuing inventory to a proper valuation
method is a change in method of accounting), supplemented T.C.
Memo. 1995-84.
We find in the legislative history under section 475 further
support for our conclusion that the instant issue involves a
method of accounting. That history, although considered to be
secondary when interpreting the statutory text, is most useful
when it comes to discerning a statute’s intended purpose. Bob
Jones Univ. v. United States, 461 U.S. 574, 586 (1983);
Albertson’s, Inc. v. Commissioner, 42 F.3d 537, 541 (9th Cir.
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