Green Forest Manufacturing Inc. - Page 5




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          determined that the change in deductions for depreciation was a             
          change in accounting method for which an adjustment pursuant to             
          section 481(a) was required for the tax year ended in 1996.                 
               At trial, petitioner conceded that respondent’s                        
          determination relating to the deductions for depreciation is                
          correct.  Petitioner conceded that each item of the Equipment               
          should be reclassified under MACRS, alternative depreciation                
          system rules, in accordance with section 168(g)(1)(A), and                  
          depreciated using the straight-line method and a 10-year recovery           
          period.                                                                     
               Petitioner continues to challenge respondent’s determination           
          relating to the adjustment pursuant to section 481(a) on                    
          multiple, alternative grounds.  First, petitioner claims that a             
          change in MACRS classification is not a change in method of                 
          accounting for which section 481(a) requires an adjustment.                 
          Second, petitioner claims that fairness should prevent an                   
          adjustment under section 481(a) because respondent’s agent                  
          reviewed and accepted petitioner’s method of depreciation and               
          accumulated depreciation during an examination of petitioner’s              
          tax years ended in 1992 and 1993.  Finally, on brief, petitioner            
          argues that respondent should not be allowed to assert an                   
          adjustment pursuant to section 481(a) without considering and               
          applying section 481(b).                                                    








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