-174-
Petitioner argues that its burden as to section 446(b) is to
prove simply that FNBC’s method of reporting its swaps income was
reasonable. We disagree. We understand section 446(b) to
require that a method of accounting clearly reflect income and
not that it simply be reasonable. A taxpayer’s method of
accounting, although believed by the taxpayer to be reasonable,
may not necessarily be a method which clearly reflects the
taxpayer’s income for purposes of Federal income taxes. Such is
especially so considering that the Commissioner is given broad
discretion under section 446(b) to determine whether an
accounting method clearly reflects income, and that his exercise
of authority under that section is given “much latitude” and
cannot be disturbed unless “clearly unlawful” or “plainly
arbitrary”. Thor Power Tool Co. v. Commissioner, supra at
532-533; Lucas v. Am. Code Co., 280 U.S. 445, 449 (1930); Am.
Fletcher Corp. v. United States, supra at 438. Moreover, it is
well engrained in our tax jurisprudence that a taxpayer
challenging the Commissioner’s exercise of authority under
section 446(b) bears a heavy burden of proving that the
Commissioner’s determination is “clearly unlawful” or “plainly
arbitrary”. Thor Power Tool Co. v. Commissioner, supra at 532-
533; Lucas v. Structural Steel Co., 281 U.S. 264, 271 (1930);
Lucas v. Am. Code Co., supra at 449. See also Am. Fletcher Corp.
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