- 39 -
that method for reporting income from construction contracts. Id.
at 294. The Court of Appeals emphasized that the taxpayer had “no
election” (i.e., choice) but to report the income in the correct
year pursuant to the method of accounting it had adopted. Id. at
294, 295. Petitioners also cite N.C. Granite Corp. v.
Commissioner, 43 T.C. 149 (1964), and Underhill v. Commissioner, 45
T.C. 489 (1966). In the first case, we said that a taxpayer need
not obtain the Commissioner’s consent to change its method of
accounting “where the law specifically prescribes or proscribes a
method of accounting or computation”. N.C. Granite Corp. v.
Commissioner, supra at 168. In the second case, we held that no
timing question was presented (so, therefore, the consent of the
Commissioner to change a method of accounting was not required)
when, to conform to caselaw, the taxpayer changed its method of
recovering its basis in speculative installment notes from a pro-
rata recovery method to a method that allowed it to recover all of
its basis before it reported any gain. Underhill v. Commissioner,
supra at 496. Because those cases were decided before 1970 and do
not address the consistency and timing considerations emphasized in
section 1.446-1(e)(2)(ii), Income Tax Regs., their weight is
uncertain.
3. Post-1970 Decisions
a. Primo Pants Co. v. Commissioner
This Court has generally agreed with section 1.446-
Page: Previous 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 NextLast modified: May 25, 2011