-175-
v. United States, supra at 438, where the Court of Appeals for
the Seventh Circuit stated:
Our task [in reviewing the Commissioner’s determination
that a method of accounting does not clearly reflect
income] is limited to determining whether the
Commissioner abused his discretion in finding it
necessary to change the taxpayer’s method of
accounting, recalling that a taxpayer has the heavy
burden of proving that the Commissioner’s determination
is plainly arbitrary. [Citations and quotation marks
omitted.]
Nor must the Commissioner establish any bad faith on the part of
a taxpayer in using a particular method of accounting before
requiring that the taxpayer change that method of accounting.
Prabel v. Commissioner, supra at 1112.
The fact that the Commissioner possesses broad authority
under section 446(b), however, does not mean that the
Commissioner may change a taxpayer’s method of accounting with
impunity. For example, the Commissioner may not change a method
of accounting which clearly reflects income to another method
that the Commissioner believes reflects income more clearly.
Osteopathic Med. Oncology & Hematology, P.C. v. Commissioner,
113 T.C. 376, 381 (1999); Ansley-Sheppard-Burgess Co. v.
Commissioner, 104 T.C. 367 (1995); Bay State Gas Co. v.
Commissioner, 75 T.C. 410, 417 (1980), affd. 689 F.2d 1 (1st Cir.
1982); see also Wal-Mart Stores, Inc. v. Commissioner, 153 F.3d
at 657 (having ruled that inventory shrinkage estimates are not
prohibited by the Internal Revenue Code or the regulations
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