- 52 -
1.446-1(e)(2)(ii)(b), Income Tax Regs., either a mathematical or
posting error.20 While, in some circumstances, a taxpayer deviating
from its previously established method of accounting may again
adhere to its established method before the deviation has time to
harden into a method of its own, the accountant’s consistent error
for no less than 10 years rules out that possibility. The
accountant’s method was, therefore, a material item in each
member’s overall plan of accounting. Respondent’s change to the
accountant’s method (a material item) was, thus, a change in method
of accounting.
IV. Conclusion
For the first year in issue of each member, respondent’s
revaluation of the member’s inventory constituted a change in the
member’s method of accounting. Therefore, respondent’s section
481(a) adjustments are permissible. Each petitioner owning shares
of stock in any member of the Huffman group must take into account
his or her share of the section 481 adjustments. We need decide no
other issue.
20 It is worth mentioning that the use of price indexes in
applying the dollar-value method is a matter to which Congress in
sec. 472(f) and the Secretary of the Treasury in his regulations,
see, e.g., sec. 1.472-8(e)(3), and revenue procedures have
devoted attention. Among the latter are Rev. Proc. 97-36, 1997-2
C.B. 450, and Rev. Proc. 97-37, 1997-2 C.B. 455 The first of
those revenue procedures describes the adoption of the
“Alternative LIFO Method” (a dollar-value link-chain method for
retailers of autos and light-duty trucks) as a change in method
of accounting. The second likewise describes the inventory
price index computation (IPIC) method.
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