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
