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are present. Section 301.9100-3(c)(2), Proced. & Admin. Regs.,
plainly states: “The interests of the Government are deemed to
be prejudiced except in unusual and compelling circumstances if
the accounting method regulatory election for which relief is
requested [is one to which subdivision (i), (ii), (iii), or (iv)
applies].” (Emphasis added.) In other words, assuming
subdivision (ii) applies, unusual and compelling circumstances
defeat the presumption of prejudice. Respondent contends that
the circumstances surrounding petitioner’s failure to timely file
a section 475(f) election were not unusual and compelling and did
not actually cause petitioner to fail to timely file the
election.
Respondent points out that the collapse of the technology
stocks, the liquidation of petitioner’s trading accounts, and
petitioner’s $25 million in losses during the first quarter of
taxable year 2000 did not literally prevent petitioner from
making the section 475(f) election. Respondent further points
out that petitioner failed to timely file the section 475(f)
election because his accountant was unaware of the election and
that ignorance of the law is no excuse.
We disagree with respondent’s contention that unusual and
compelling circumstances are not present in the instant case.
The Commissioner has not defined, by regulation or otherwise,
unusual or compelling circumstances. We note that the preamble
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