Copy Data, Inc. v. Commissioner
United States Tax Court
Petitioner was engaged in the business of sale and service of photocopying equipment. On its tax returns, petitioner deducted "sales exposure expense" relating to warranty obligations to its customers. The amount deducted each year was a composite of an adjustment to an established reserve account and actual expenses for the year. Petitioner acquiesced in respondent's disallowance of the method of determining expense.
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Petitioner was engaged in the business of sale and service of photocopying equipment. On its tax returns, petitioner deducted "sales exposure expense" relating to warranty obligations to its customers. The amount deducted each year was a composite of an adjustment to an established reserve account and actual expenses for the year. Petitioner acquiesced in respondent's disallowance of the method of determining expense. Held, discontinuance of petitioner's practice constituted a "change in method of accounting" within the meaning of sec. 481, I.R.C. 1954, as amended, and the remaining balance…
1Opinion of the Court
OPINION
COHEN, Judge:
Respondent determined deficiencies of $15,411, $1,115, and $1,789 in petitioner’s Federal income taxes for 1981, 1982, and 1983, respectively. After concessions by petitioners, the sole issue for determination is whether termination of petitioner’s practice of deducting “sales exposure expense” in relation to customer warranty obligations was a change in method of accounting within the meaning of section 481.1
All of the facts have been stipulated, and the stipulated facts are incorporated in our findings by this reference. Petitioner had its principal place of business in…
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