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Furthermore, in view of the Commissioner’s authority to
determine whether a method of accounting clearly reflects
income, the method of accounting used by a taxpayer for
book purposes is not binding on the Commissioner, even
if it is in accord with Generally Accepted Accounting
Principles. See, e.g., Thor Power Tool Co. v. Commis-
sioner, supra at 540-543; Am. Auto. Association v. United
States, 367 U.S. 687, 692-693 (1961); Old Colony R. Co. v.
Commissioner, 284 U.S. 552, 562 (1932). As stated by the
regulations: “no method of accounting is acceptable
unless, in the opinion of the Commissioner, it clearly
reflects income.” Sec. 1.446-1(a)(2), Income Tax Regs.
At the same time, however, the Commissioner’s
discretion under section 446(b) is not unlimited. As we
have noted in the past, the Commissioner cannot require a
taxpayer to change accounting methods if the taxpayer’s
method of accounting clearly reflects income. See, e.g.,
Prabel v. Commissioner, supra at 1112; Hallmark Cards,
Inc. v. Commissioner, 90 T.C. 26, 31 (1988). Similarly,
the Commissioner cannot require the taxpayer to change
from one incorrect to another incorrect method. E.g.,
Prabel v. Commissioner, supra at 1112; Hosp. Corp. of Am.
v. Commissioner, T.C. Memo. 1996-105, affd. 348 F.3d 136
(6th Cir. 2003).
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