-189- Commissioner should defer to the taxpayer’s normal financial accounting valuation, which in the case of a swaps dealer was generally the method that was recommended by the G-30 report. This implication that using financial accounting methods would “alleviate unnecessary compliance burdens” is buttressed by another part of the legislative history of section 475. This other part, which relates to the identification of certain securities as hedges (and not the fair market valuation of securities), indicates that the use of financial accounting methods would be an adequate and efficient method for applying mark-to-market rules. The other part states: It is anticipated that the identification rules with respect to hedges will be applied in such a manner as to minimize the imposition of additional accounting burdens on dealers in securities. For example, it is understood that certain dealers in securities use accounting systems which treat certain transactions entered into between separate business units as if such transactions were entered into with unrelated third parties. It is anticipated that for the purposes of the mark-to-market rules, such an accounting system generally will provide an adequate identification of hedges with third parties. [H. Rept. 103-111, supra at 664, 1993-3 C.B. at 240.] B. Standard of the Mark-to-Market Method Is Not Reasonableness Petitioner argues that FNBC was allowed to use its specific mark-to-market method for purposes of section 475 because, petitioner asserts, FNBC’s method was “reasonable”. We disagree with petitioner that the reasonableness of a particular method of accounting is the linchpin of an acceptable method under sectionPage: Previous 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 Next
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