Case: Continuing Care Facility’s Method of Accounting Clearly Reflected Income, Tax Court Decision Affirmed (9th Cir.) (IRC §446)

A continuing care facility’s accounting method for deferred entrance fees clearly reflected income and was consistent with regulatory requirements, the U.S. Court of Appeals for the Ninth Circuit held, affirming the U.S. Tax Court’s decision. The Tax Court previously granted summary judgment to the facility because the method of accounting clearly reflected income and complied with generally accepted accounting principles, and I.R.C. §446 did not grant the Commissioner authority to change a taxpayer’s method of accounting to a method that “more clearly” reflected income. The appeals court agreed with the Tax Court that the accounting method for deferred entrance fees ...