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vacation pay plan. Sec. 1.446-1(e)(2)(iii), Example (3), Income
Tax Regs. This change had the effect of accruing the vacation
pay deduction in a different taxable year. The example explains
that since there has been a change in the underlying facts, that
is, a change in the type of vacation pay plan used by the
taxpayer, the taxpayer has not changed his method of accounting.
This example does not support petitioner’s argument because,
unlike the example in the regulations, Color Arts did not change
the operative provisions of its vacation plan.
In the alternative, petitioner argues that the change in the
way Color Arts computes its vacation pay deduction is simply the
correction of a posting error or an error in the computation of
its tax liability. See sec. 1.446-1(e)(2)(ii)(b), Income Tax
Regs. Petitioner likens Color Arts’s situation with that of
taxpayers in cases like N. States Power Co. v. United States,
supra, and Korn Indus., Inc. v. United States, 209 Ct. Cl. 559,
532 F.2d 1352 (1976). In N. States Power Co. v. United States,
supra at 884, the taxpayer’s tax department was unaware that
certain capital accounts included unrecouped losses. The
taxpayer filed a refund claim “when it learned that the work
order account included currently deductible contract losses. In
so doing, it sought to treat the * * * contract losses in the
same manner that it has consistently treated similar types of
losses”. Id. at 884. The court held that the taxpayer’s
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