It first found that asphalt was not merchandise relying upon Galedrige Constr

It first found that asphalt was not merchandise

This preview shows page 3 - 4 out of 6 pages.

331431 (1998). It first found that asphalt was not merchandise, relying upon Galedrige Constr., Inc. v. Commissioner, 73 T.C.M. (CCH) 2838, 1997 WL 269574 (1997). Id. at 2535. The Tax Court also found that because the taxpayer had no inventories, S 1.471-1 did not apply. Id. Finally, it found that the cash method of accounting clearly reflected taxpayer's income, so that even if S 1.471-1 applied, taxpayer was not required to change its accounting method. Id. at 2535-36. The Commissioner timely appealed. (The Honorable Donald P. Lay, Senior) Even though the commissioner has the authority to request a company to change its accounting method in this case he was incorrect in the reasoning behind the reason for the request. In this case we saw firsthand how a simple choice in method can have a great effect on the income a company reports and why it is such a huge deal to have the correct method. The commissioner wanted the company to use the accrual method because they would not be able to have as many deductions as they did previously. Though the tax court itself sided with Jim Turin an appeal was made to the Supreme Court in which they found the ruling valid. A paving company that lays asphalt immediately upon purchase cannot delay income or accelerate deductions by inventorying its asphalt, because there is no inventory that can be purchased late in one tax year and held over to the next. Thus, given the rationale of S 1.471-1, we agree with the
Image of page 3
Image of page 4

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture