- 48 -
the proper time for the taking of a deduction. See sec.
1.446-1(e)(2)(ii)(a), Income Tax Regs.
Petitioner’s Arguments Do Not Persuade Us That the Subject
Change Is Not a Change of Accounting Method
Petitioner argues that the proposed change in the
treatment of its overburden removal costs is not a change
of accounting method but only a recharacterization of the
costs from development expenditures to production costs.
In support of that argument petitioner cites four cases:
Underhill v. Commissioner, 45 T.C. 489 (1966); Coulter
Elecs., Inc. v. Commissioner, T.C. Memo. 1990-186; Standard
Oil Co. (Indiana) v. Commissioner, 77 T.C. 349 (1981); and
Tex. Instruments Inc., & Consol. Subs. v. Commissioner,
T.C. Memo. 1992-306.
We believe that the cases petitioner cites are
distinguishable. In Underhill v. Commissioner, supra, the
Court held that a taxpayer’s switch to a cost recovery
method of determining income from certain promissory notes,
after having used a pro rata method with regard to the same
notes in previous years, was not a change in method of
accounting under section 446(e). The Court held that
section 446 was inapplicable because the issue involved
“the extent to which payments received by * * * [the
taxpayer] are taxable or nontaxable–-i.e., the character
Page: Previous 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 NextLast modified: May 25, 2011