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Regulations also detail certain types of adjustments, with
examples thereof, that are specifically excluded from
characterization as changes in method of accounting:
A change in method of accounting does not include
correction of mathematical or posting errors, or errors
in the computation of tax liability * * *. Also, a
change in method of accounting does not include
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. For
example, corrections of items that are deducted as
interest or salary, but which are in fact payments of
dividends, and of items that are deducted as business
expenses, but which are in fact personal expenses, are
not changes in method of accounting. In addition, a
change in the method of accounting does not include an
adjustment with respect to the addition to a reserve
for bad debts or an adjustment in the useful life of a
depreciable asset. Although such adjustments may
involve the question of the proper time for the taking
of a deduction, such items are traditionally corrected
by adjustments in the current and future years. * * *
[Sec. 1.446-1(e)(2)(ii)(b), Income Tax Regs.]
Thus, even though an adjustment in the useful life of a
depreciable asset may involve the question of the proper time for
the taking of a deduction, such an item is includable among those
that are traditionally corrected by adjustments in the current
and future years, and a change in accounting method is not
involved. The regulation is totally consistent with the language
of section 481(a)(2) because the useful life adjustment is not a
change “necessary * * * to prevent amounts from being duplicated
or omitted”. Therefore, section 481(a) is not implicated so as
to require an adjustment thereunder.
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