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item in income or the taking of a deduction.” Sec. 1.446-
1(e)(2)(ii)(a), Income Tax Regs.; see Knight-Ridder Newspapers,
Inc. v. United States, 743 F.2d 781, 798 (11th Cir. 1984); Wayne
Bolt & Nut Co. v. Commissioner, supra at 510. Accordingly, “An
accounting practice involving the timing of when an item is
deducted is considered a method of accounting.” FPL Group, Inc.
v. Commissioner, 115 T.C. 554, 562 (2000) (citing GMC v.
Commissioner, 112 T.C. 270, 296 (1999)).
However, a change in a method of accounting does not occur
when the taxpayer seeks to correct a mathematical or posting
error, an error in the computation of tax liability, a change in
the treatment of an item based upon a change in the underlying
facts, or any other “‘adjustment of any item of income or
deduction which does not involve the proper time for the
inclusion of the item of income or the taking of a deduction.’”
FPL Group, Inc. v. Commissioner, supra at 570 (quoting N. States
Power Co. v. United States, 151 F.3d 876, 883 (8th Cir. 1998));
sec. 1.446-1(e)(2)(ii)(b), Income Tax Regs.
Petitioner argues that the disallowance of Color Arts’s
$245,000 deduction for vacation pay was based on a change in the
underlying facts and not a change to its method of accounting.
Petitioner relies upon an example in the regulations. In the
example, an overall accrual method taxpayer changed from a “not
completely vested” vacation pay plan to a “completely vested”
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