Accrual Method-Contingency Reserve.-Court reexamined its deci-
sion in General Gas Corporation, 33 T.C. 303, affd. 293 F. 2d 35, which
taxpayer conceded disposed of precise question in its case but asserted
was incorrectly decided, and finding no reason to reach different result,
determined taxpayer was not entitled to overpayment or adjustment
for amounts reported as income from certain installment sales notes
transferred by it to finance company without recourse, notwithstand-
ing retention thereof by assignee as contingency reserve, and face
amount of notes was income in year of sale. American Can Co‒‒‒‒
Accrual Method-Salary Settlement Payments-Year Deductible.-
Accrual basis corporation was entitled under sec. 461 (1954 Code) and
regulations to deduct for 1956 sum of $117,400, representing liquidated
damages payable in 5 annual installments commencing in 1957 to
former president under settlement agreement arising from corpora-
tion's termination of his employment and his demand for reinstate-
ment. since agreement fixed president's rights and established definite
liability of corporation which was not subject to contingencies and was
absolute and irrevocable in 1956, so that all events had occurred in
1956 to determine fact of liability to pay $117,400. Champion Spark
Plug, 30 T.C. 295, followed. Peninsular Metal Products Corporation_-_-
Change of Method-Cash to Accrual Method-Partnership.-Partner-
ship which prepared 1954 return of income on accrual basis, on advice
of revenue agent investigating its 1952 return that it was proper
method and after consulting attorney, initiated change in accounting
method from cash to accrual basis, since agent merely made suggestion
and did not instruct partnership's accountant in this matter. Partner-
ship's timely filed election to have pre-1954 adjustments included in
income over 10-year period commencing in 1958 constituted valid elec-
tion under sec. 481(b) (4) (B) (1954 Code), notwithstanding partners
reserved right to contest inclusion of any adjustment for year prior
to 1954 in their income for any year. Addition to tax for substantial
underestimate of estimated tax was sustained if recomputation under
Court's holding warranted it. Irving Falk_
Change of Method-Commissioner's Determination-Successor Busi-
ness.-Corporation organized by partnership in tax-free exchange on
Jan. 1, 1956, to succeed to latter's business of manufacturing and
selling dental cushions, and which continued partnership practice of
reporting income on cash receipts and disbursements basis, was prop-
erly required by Commissioner to use accrual basis of accounting,
since inventories were necessary in this type of business to properly
reflect income; inventory and accounts receivable transferred to cor-
poration had zero basis and Commissioner was correct in not deducting
inventory as of Jan. 1, 1956, and in adding amounts of accounts re-
ceivable transferred to corporation in computing its income for 1956
and 1957, since corporation was separate entity from partnership and
was not same taxpayer as partnership within meaning of sec. 481
(1954 Code). Ezo Products Co----.
Change of Method-System of Accounting.-Can manufacturer which
inconsistently with its accrual method of accounting deducted vaca-
tion pay and some State property taxes in year paid rather than year
accrued for undisclosed number of years prior to 1953 was neverthe-
less required to determine its 1953 income by deducting amounts of
such items which accrued in 1953 rather than were paid in that year,
and correction of erroneous treatment of these items did not involve
changes in accounting system requiring prior consent of Commissioner