-190-
475. Contrary to petitioner’s assertion, the mere fact that
FNBC’s swap valuations were recurring and business in nature does
not mean that FNBC was free to use for purposes of section 475
whatever “reasonable” method it decided was proper. We disagree
with petitioner when it asserts that an established business
judgment rule requires that this Court, for Federal income tax
purposes, defer to FNBC’s choice of either (or both) an
accounting method or a valuation method for nontax purposes. The
cases upon which petitioner relies, namely, as to a method of
accounting, Photo-Sonics, Inc. v. Commissioner, 357 F.2d 656 (9th
Cir. 1966), affg. 42 T.C. 926 (1964); Osteopathic Med. Oncology &
Hematology, P.C. v. Commissioner, 113 T.C. 376 (1999); Auburn
Packing Co. v. Commissioner, 60 T.C. 794 (1973); and Wal-Mart
Stores Inc. v. Commissioner, 153 F.3d 650 (8th Cir. 1998), and,
as to a valuation method, Vinson & Elkins v. Commissioner, 7 F.3d
1235 (5th Cir. 1993), affg. 99 T.C. 9 (1992); Portland
Manufacturing Co. v. Commissioner, 56 T.C. 58 (1971); and Utah
Med. Ins. Association v. Commissioner, T.C. Memo. 1998-458, do
not adequately support that argument. In this regard, we do not
question the reasonableness of FNBC’s business judgment, nor do
we substitute our business judgment for its. We simply analyze
whether the method of accounting resulting from FNBC’s exercise
of business judgment clearly reflects FNBC’s swaps income so as
to be acceptable under sections 446(b) and 475.
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