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D. Use of Both Cash and Accrual Methods
Petitioner argues that it should be permitted to use the
cash method for the business activity of cutting trees on its
own land. “Where a taxpayer has two or more separate and
distinct trades or businesses, a different method of accounting
may be used for each trade or business, provided the method used
for each trade or business clearly reflects the income of that
particular trade or business.” Sec. 1.446-1(d)(1), Income Tax
Regs. “No trade or business will be considered separate and
distinct * * * unless a complete and separable set of books and
records is kept for such trade or business.” Sec. 1.446-
1(d)(2), Income Tax Regs.
Petitioner does not maintain separate businesses or
separate books and records for its various business activities.
Indeed, petitioner stipulated: “Because of the scope of
petitioner’s activities and the entrepreneurial nature of the
industry, it is impossible to describe a single business model.
Further, the extent of petitioner’s activities * * * will vary
from year [to year] and involve many unique transactions.”
Petitioner engages in various business activities. In
Wilkinson-Beane, Inc. v. Commissioner, 420 F.2d at 355, the
Court of Appeals for the First Circuit, the court to which an
appeal of this case would lie, held that the taxpayer had to use
the accrual method where its business involved providing funeral
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