Ezel / IRS Rulings / 1027054
Chief Counsel Advice 1027054 Released July 9, 2010 Advice

CCA 1027054: Advice on consistency and erroneous accounting methods

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This page covers one taxpayer's ruling from 2010, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2010
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
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Plain-English summary

Chief Counsel Advice discusses the weight that consistent application of an accounting method may receive in determining whether the method is permissible. The advice states that consistency can be an important consideration, but consistency alone does not satisfy the taxpayer's burden. It also states that consistency will be disregarded when the taxpayer has used an erroneous accounting method. The excerpt cites cases involving capitalization and overhead expenses for self-constructed assets.

Ruling snapshot

  • Question: Does consistently applying an accounting method make the method permissible?
  • Outcome: advice given
  • Key authorities: IRC § 446; Fort Howard Paper Company v. Commissioner; Photo-Sonics, Inc.; Advertisers Exchange, Inc.; Ezo Products Co.; V. T. H. Bien; D. Loveman & Son Export Corporation

Full text (IRS public release)

ID: CCA-124122-10 Number: 201027054
Release Date: 7/9/2010
Office: ----------------
UILC: 446.03-00

From: -----------------------
Sent: Sunday, January 24, 2010, 12:21 PM
To: ---------------------------------------------------------------
Cc: ----------------------------
Subject: One last blast

TC, [ CCH Dec. 28,712] , Fort Howard Paper Company v. Commissioner, [Methods of accounting: Overhead
expenses: Capitalization: Self-constructed assets.]--, (Dec. 27, 1967)

Finally it has been recognized that consistency of application is an important consideration and may be entitled to
considerable weight. Photo-Sonics, Inc., supra at p. 935; cf. Advertisers Exchange, Inc. [Dec. 21,583 ], 25 T. C.
1086 (1956), affirmed per curiam [57-1 ustc ¶9414 ] 240 F. 2d 958 (C. A. 2, 1957). But consistency standing alone
is not sufficient to satisfy the taxpayer’s burden. Photo-Sonics, Inc., supra at p. 935; Ezo Products Co. [Dec. 25,149
], 37 T. C. 385, 391 (1961); V. T. H. Bien [Dec. 19,574 ], 20 T. C. 49 (1953). Indeed, it will be disregarded where
an erroneous method of accounting has been used. Photo-Sonics, Inc., supra; D. Loveman & Son Export
Corporation [Dec. 24,297 ], 34 T. C. 776 (1960), affd. [62-1 ustc ¶9147 ] 296 F. 2d 732 (C. A. 6, 1962), certiorari
denied 369 U. S. 860 (1962).

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