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1(e)(2)(ii), Income Tax Regs., which gives consistency and timing
considerations an important, if not determinative, role to play in
determining whether the treatment of an item constitutes a method
of accounting, and the proposition, advanced by petitioners and
evidenced by a body of caselaw (including cases of this Court),
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.
The notion that a taxpayer does not change its method of
accounting when it merely conforms to a prescribed (but ignored)
method of accounting is contradicted by at least one example in
section 1.446-1(e)(2)(ii)(c), Income Tax Regs. Sec. 1.446-
1(e)(2)(ii)(c), Example (1), Income Tax Regs., addresses a merchant
(a jeweler) erroneously reporting income from sales on the cash
method of accounting. As discussed supra under the heading “Use of
Inventories”, inventories and an accrual method of accounting are
required when the sale of merchandise is an income-producing
factor. The example holds that a change from the cash method to
the accrual method is a change in the merchant’s overall plan of
accounting and thus is a change in method of accounting. Moreover,
the notion is also inconsistent with the more recent view of the
courts that a taxpayer needs the Commissioner’s consent to change
from an erroneous to a correct method of accounting. See, e.g.,
Wayne Bolt & Nut Co. v. Commissioner, 93 T.C. at 511 (“A change in
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