proration of the paint can then be determined by questioning the taxpayer as to how many gallons they are allowed to spray by the EPA or AQMD.

CHANGES IN ACCOUNTING METHOD

Treas. Reg. section 1.446-1(c)(2)(i), states that when it is necessary to use inventories, the accrual method of accounting must be used with regard to PURCHASES and

SALES unless otherwise authorized under the following subsections of the regulations. Because a change to the use of inventories may require that a cash basis taxpayer convert to an accrual basis, the examiner should be aware of the necessity to make adjustments in other areas. See Section on Changes in Accounting Method.

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Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Glossary