Green Forest Manufacturing Inc. - Page 7




                                        - 7 -                                         
          reason of the change in order to prevent amounts from being                 
          duplicated or omitted”.  Sec. 481(a)(2).  If there has been a               
          change in method of accounting, then section 481(a) applies and             
          adjustments are made thereunder to prevent the omission or                  
          duplication of taxable income caused solely by the change in                
          method of accounting.  If there has not been a change in method             
          of accounting, then no adjustment pursuant to section 481(a) is             
          made.                                                                       
               A change in method of accounting to which section 481(a)               
          applies includes “a change in the overall method of accounting              
          for gross income or deductions, or a change in the treatment of a           
          material item.”  Sec. 1.481-1(a)(1), Income Tax Regs.                       
               Regulations promulgated under section 481(a) incorporate the           
          rules of section 446(e) and section 1.446-1(e), Income Tax Regs.,           
          for determining when a change in method of accounting has                   
          occurred.  Sec. 1.481-1(a)(1), Income Tax Regs.  A change in                
          method of accounting “includes a change in the overall plan of              
          accounting for gross income or deductions or a change in the                
          treatment of any material item used in such overall plan.”  Sec.            
          1.446-1(e)(2)(ii)(a), Income Tax Regs.  A material item, in turn,           
          “is any item which involves the proper time for the inclusion of            
          the item in income or the taking of a deduction.”  Id.                      










Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011