- 33 -
unacceptable.” Thor Power Tool Co. v. Commissioner, supra
at 542-543.
Furthermore, it is often difficult to find that a
taxpayer’s return is not in conformity with the taxpayer’s
books. A taxpayer’s books often contain sufficient records
and data to permit a reconciliation of any differences
between a taxpayer’s return and its books. See Patchen v.
Commissioner, 258 F.2d 544, 550 (5th Cir. 1958), revg. in
part on another ground and affg. in part 27 T.C. 592
(1956); Public Serv. Co. v. Commissioner, supra at 452;
St. Luke’s Hosp., Inc. v. Commissioner, 35 T.C. 236, 247
(1960). According to the regulations promulgated under
section 446, such a reconciliation of differences between
the taxpayer’s books and his return form a part of the
taxpayer’s accounting records. See sec. 1.446-1(a)(4),
Income Tax Regs.; see also Rev. Rul. 74-383, 1974-2 C.B.
146.
Subsection (b) of section 446 sets forth statutory
exceptions to the conformity requirement. Under that
subsection, if the taxpayer does not regularly use a method
of accounting, or if the method used does not clearly
reflect income, then “the computation of taxable income
shall be made under such method as, in the opinion of the
Secretary, does clearly reflect income.” Sec. 446(b).
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