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(ii) Requires an adjustment under section 481(a)
(or would require an adjustment under section
481(a) if the taxpayer changed to the method of
accounting for which relief is requested in a
taxable year subsequent to the taxable year the
election should have been made);
(iii) Would permit a change from an impermissible
method of accounting that is an issue under
consideration by examination, an appeals office,
or a federal court and the change would provide a
more favorable method or more favorable terms and
conditions than if the change were made as part of
an examination; or
(iv) Provides a more favorable method of
accounting or more favorable terms and conditions
if the election is made by a certain date or
taxable year.
Accordingly, the interests of the Government are not deemed to be
prejudiced in the case of an accounting method regulatory
election if the provisions of section 301.9100-3(c)(2)(i), (ii),
(iii), or (iv), Proced. & Admin. Regs., do not apply or, if they
do, unusual and compelling circumstances are present.
Section 301.9100-3(c)(1), Proced. & Admin. Regs., defines
prejudice as follows:
In general. --The Commissioner will grant a reasonable
extension of time to make a regulatory election only
when the interests of the Government will not be
prejudiced by the granting of relief. * * *
(i) Lower tax liability.-- The interests of the
Government are prejudiced if granting relief would
result in the taxpayer having a lower tax
liability in the aggregate for all taxable years
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