However, if a taxpayer files Form 3115, Application for Change in Accounting Method
, for that year, and the taxpayer's NAE method is an issue under consideration for a tax year under examination, then the audit protection of Section 7 of Rev.
Boyle concluded, "the LIFO method has provided for the proper matching of revenues and expenses in the computation of the cost of goods sold and taxable profits, especially in periods of rising prices." Moreover, taxpayers may use LIFO only if their financial accounting treatment of inventory conforms with their tax accounting method
. "Raising the taxes of a significant segment of the U.S.
The revenue procedures both amend existing accounting method
change procedures in Rev.
The industry directive further cautioned that prior IRS consent was still required for accounting method
The LIFO accounting method
for inventories was first permitted in the Revenue Act of 1938 and was quickly extended to all taxpayers in the Internal Revenue Code of 1939.
9, 2002, this nonaccrual accounting method
applies only to services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts or consulting--if the taxpayer does not charge interest or a penalty for failure to timely pay the amount charged.
First, note that eligible taxpayers making an accounting method
change under Rev.
The taxpayer relied on a provision of the TRA that provided that a change in accounting method
to comply with the act could be "treated as made with the consent of the Secretary of the Treasury." The court, however, observed that this provision was not codified.
Observation: A change in accounting method
should not be confused with the correction of an error, which is handled on an amended return.
This case illustrates that a change in accounting method
for tax purposes is a broader concept than for financial accounting purposes.
Thus, in general, once the accounting method
is adopted, the controlling domestic shareholders must follow the method change procedures set forth in either Rev.
* The rapid growth of these markets demands an accounting method
that more clearly reflects the underlying philosophy of these purchases.