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2. Petitioners’ Argument
Petitioners’ argument is as follows: “It has long been held
that where a taxpayer properly elects a particular accounting
method, the making by the taxpayer of an error in the use of that
accounting method is an error. Thus, it logically follows that the
correction of that error is not a change of accounting method.”
Petitioners’ argument rests on the premise that a taxpayer does not
change its method of accounting by deviating from it. If the
premise is sound, then the taxpayer does not change its method of
accounting by correcting that deviation, since before, during, and
after the deviation, the taxpayer used the same method of
accounting.
Petitioners can find some support for their premise in cases
holding that a taxpayer does not change its method of accounting
when it does no more than conform to a prior accounting election or
some specific requirement of the law. Many of the cases that
petitioners rely on, however, were decided before the 1970
revisions to section 1.446-1(e), Income Tax Regs., emphasizing
consistency and timing considerations. Petitioners refer us to
Thompson-King-Tate, Inc. v. United States, 296 F.2d 290 (6th Cir.
1961), in which the Court of Appeals held that the taxpayer had the
right to change its original reporting position and report income
from a construction contract in the year the contract was finally
completed and accepted because the taxpayer had previously adopted
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