-173-
and water conservation expenditures, depreciation, [and] net
operating losses” as examples of items which require a more
specific accounting method. Id. The regulations do not indicate
that the mark-to-market rules of section 475 involve an item that
requires a specific method different than book method.
Even in cases where an item is not listed as requiring a
specific method of tax accounting, section 446(b) gives the
Commissioner broad authority to require a certain method of tax
accounting as to that item when the taxpayer’s method of tax
accounting fails to reflect the taxpayer’s income clearly. Thor
Power Tool Co. v. Commissioner, 439 U.S. 522, 532 (1979);
Commissioner v. Hansen, 360 U.S. 446, 467 (1959); see also sec.
1.446-1(a)(2), Income Tax Regs. The Commissioner’s authority
under section 446(b) encompasses overall methods of accounting,
as well as specific methods used to report any item of income or
expense. Thor Power Tool Co. v. Commissioner, supra at 531;
Prabel v. Commissioner, 91 T.C. 1101, 1112-1113 (1988), affd.
882 F.2d 820 (3d Cir. 1989); Wal-Mart Stores Inc. v.
Commissioner, T.C. Memo. 1997-1, affd. 153 F.3d 650 (8th Cir.
1998); see also sec. 1.446-1(a), Income Tax Regs. The
Commissioner’s authority under section 446(b) authorizes the
Commissioner to change a method of accounting used by a taxpayer
such as FNBC to report its swaps income under section 475 if that
method does not clearly reflect that income.
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