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Accordingly, if a taxpayer changes his method of accounting and
an amount would be duplicated or omitted because of the change,
section 481(a) requires an adjustment to prevent the distortion.
For example, if an accrual method taxpayer included in income for
year 1 an amount which he had the right to receive, but switched
to the cash method of accounting in year 2 when he actually
received the amount, a section 481(a) adjustment would be
necessary to prevent the same item of income from being included
in 2 different tax years.
Petitioner contends that, because he adopted the mark-to-
market method of accounting for his securities trading business
in taxable year 2000, the first year that his securities trading
business existed, and did not change from another method of
accounting, no item would be duplicated or omitted, no section
481(a) adjustment is required, and therefore there is no
prejudice under section 301.9100-3(c)(2)(ii), Proced. & Admin.
Regs.18
17(...continued)
In computing taxable income, � 481(a) requires a
taxpayer to take into account those adjustments
necessary to prevent amounts from being duplicated or
omitted when the taxpayer’s taxable income is computed
under a method of accounting different from the method
used to compute taxable income for the preceding
taxable year.
18Cf. sec. 301.9100-3(f), Example (4), Proced. & Admin.
Regs., which provides as follows:
(continued...)
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