- 28 -
elections contained in section 301.9100-3(c)(2), Proced. & Admin
Regs. The parties dispute whether section 301.9100-3(c)(2)(ii),
Proced. & Admin. Regs., applies. Paragraph 3(c)(2)(ii) presumes
prejudice, absent unusual and compelling circumstances, if the
election “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)”.
Section 481(a) prescribes the rules for adjustments required
by changes in methods of accounting as follows:
SEC. 481(a) General Rule.-- In computing the
taxpayer’s taxable income for any taxable year
(referred to in this section as the “year of change”)–
(1) if such computation is under a method of
accounting different from the method under which
the taxpayer’s taxable income for the preceding
taxable year was computed, then
(2) there shall be taken into account those
adjustments which are determined to be necessary
solely by reason of the change in order to prevent
amounts from being duplicated or omitted, except
there shall not be taken into account any
adjustment in respect of any taxable year to which
this section does not apply unless the adjustment
is attributable to a change in the method of
accounting initiated by the taxpayer. [Emphasis
added.17]
17Sec. 1.481-1(a)(1), Income Tax Regs., contains almost
identical language regarding the purpose of the adjustment under
sec. 481(a). Rev. Proc. 99-17, sec. 204, 1999-1 C.B. at 504
itself corroborates this purpose:
(continued...)
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011