James M. Rankin Shirley Rankin v. Commissioner of Internal Revenue

TASHIMA, Circuit Judge:

As the Tax Code has long acknowledged, the timing of income recognition is a difficult, complicated problem. Rather than exhaustively list when every possible kind of income must be recognized, the Tax Code instead gives taxpayers some latitude in timing their income recognition. Subject to several restrictions, taxpayers may choose a method of accounting that allocates different income to different time periods.

With this latitude, however, come many risks, and one is that when a taxpayer changes his method of accounting, some of his income may be taxed twice or not at…