I. BACKGROUND For an excellent "capsulated discussion of the statutory-decisional background" of Section 481 see Commissioner v. Welch, 5 Cir. 1965, 345 F.2d 939, 942-943. See also Yager, The Dilemma Under Section 481, N.Y.U. 16th Inst. on Fed. Tax 565, 566-569 (1962).

Mingo's contention is founded upon a misunderstanding of the phrase “any taxable year to which this section does not apply.” See id. As this Circuit has previously explained, “The only limitation on [§ 481(a) ] adjustments is that no pre–1954 adjustments shall be made.” Comm'r v. Welch, 345 F.2d 939, 950 (5th Cir.1965). Thus, for the purposes of present-day § 481(a) adjustments, once there has been a change in the method of accounting, no statute of limitations applies to the Commissioner's ability to correct errors on old tax returns.

The first full paragraph of the Form 870 signed by Wolf expressly states that consent to the assessment of the deficiencies shown in the waiver "will not prevent you from filing a claim for refund ... [and] will not prevent us from later determining, if necessary, that you owe additional tax." See Commissioner v. Welch, 345 F.2d 939, 948 (5th Cir. 1965) (execution of Form 870 "does not foreclose further action by the Commissioner and the assertion of deficiency notices"). VI

" H.Rep. No. 1337, 83d Cong., 2d Sess. (1954), 3 U.S. Code, Cong. Adm. News (1954), pp. 4017, 4303; S.Rep. No. 1622, 83d Cong., 2d Sess. (1954), 3 U.S. Code Cong. Adm. News (1954), pp. 4621, 4947. Courts have recognized that the principal intent of Congress in enacting Sec. 481 was to ensure that after 1954 no item would escape taxation or be overtaxed or under-taxed when a taxpayer changed its method of accounting or reporting income. Grogan v. United States, 475 F.2d 15 (5th Cir. 1973); Commissioner v. Welch, 345 F.2d 939 (5th Cir. 1965); Graff Chevrolet Co. v. Campbell, 343 F.2d 568 (5th Cir. 1965). Defendant, in its brief emphasized the sentence from the House Report quoted above beginning "At the same time."

" Commissioner of Internal Revenue v. Duberstein et ux, 1960, 363 U.S. 278, 80 S.Ct. 1190, 4 L.Ed.2d 1218. Supporting this doctrine are United States v. United States Gypsum Company, 1948, 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746, and Commissioner of Internal Revenue v. Welch, 5th Cir. 1965, 345 F.2d 939. The clearly erroneous doctrine applies where the inferences are as to design, motive and intent.

The Tax Court made a finding of fact that taxpayer initiated the change in its accounting system. While there appears to be some conflict in the Circuits over the question of what effect a revenue agent's "suggesting" or "requiring" a taxpayer to change its accounting system has upon the issue of who initiated the change, compare Biewer v. Commissioner, 341 F.2d 394 (6th Cir. 1965) with Commissioner of Internal Revenue v. Welch, 345 F.2d 939 (5th Cir. 1965) and United States v. Lindner, 307 F.2d 262 (10th Cir. 1962), in the present case the issue turned on a simple question of credibility. Taxpayer's witnesses testified that the revenue agent instructed or directed them to change accounting systems.

A letter written jointly by counsel for the parties states: "Because of the nature and extent of the difficulty in arranging for the availability of witnesses from abroad, counsel concluded that the matter could be presented to the Court most expeditiously by taking all testimony by deposition before trial. * * *" See also Mitchell v. Raines, 5 Cir. 1956, 238 F.2d 186; Mayo v. Pioneer Bank Trust Co., 5 Cir. 1961, 297 F.2d 392; C.I.R. v. Welch, 5 Cir. 1965, 345 F.2d 939; Frazier v. Alabama Motor Club, 5 Cir., 1965, 349 F.2d 456; International Minerals Chemical Corp. v. Moore, 5 Cir. 1966, 361 F.2d 849. The dispute between the parties arose as a result of a written contract dated April 7, 1965, between Wilmar Engineering Sales Corporation, represented by Raymond G. Willhoft, Secretary-Treasurer of the company, and Sicula Oceanica, S.A. (Siosa), represented by Dr. Aldo Grimaldi, General Agent and part owner of Siosa. The contract obligated Wilmar to clean the tanks of the M/V Perseo by April 13, 1965, for "the maximum price of $31,000".

Recomputation of the 1944-1955 taxable income figures using the recommended average net profits-to-average gross bank deposits ratio and redetermination of the Cohan rule allowance for nontaxable portions of C.O.D. and interline deposits — both predicated upon known and applied information for tax years 1956-1962 — will then establish beyond question that the particular bank deposits method employed actually represented, under the circumstances, a rational and fair determination, rather than a conclusion such as we presently review which seems speculative and arbitrary. See Webb v. Commissioner, supra, 394 F.2d at 373; Commissioner of Internal Revenue v. Welch, 5 Cir. 1965, 345 F.2d 939, 943-944. See also Helvering v. Taylor, supra.

In accord with Filippini and Miller are Graper v. United States, E.D.Wis. 1962, 206 F. Supp. 173; In re Milwaukee Crate Lumber Co., E.D.Wis. 1961, 206 F. Supp. 115. See also Commissioner of Internal Revenue v. Welch, 5 Cir. 1965, 345 F.2d 939, 948 n. 33. When § 6203 of the Internal Revenue Code of 1954 was before Congress, the detailed discussions of the proposed section in both the House and Senate was substantially the same:

* * * See also Rosengarten v. United States, supra; Commissioner of Internal Revenue v. Welch, 345 F.2d 939, 943 (5th Cir. 1965); Spreitler v. Louisville N.R. Co., 125 F.2d 115, 117 (7th Cir. 1941); Trust Co. of Chicago v. Erie R. Co., 165 F.2d 806, 809 (7th Cir. 1948), cert. denied, 334 U.S. 845, 68 S.Ct. 1513, 92 L.Ed. 1769; Gulf, M. O.R. Co. v. Freund, 183 F.2d 1005, 1010 (8th Cir. 1950), cert. denied, 340 U.S. 904, 71 S.Ct. 280, 95 L.Ed. 654. Negative evidence as to habit, custom and procedure may create a presumption that the ordinary course of business or procedure was followed on a given day. Knickerbocker Life Ins. Co. v. Pendleton, 115 U.S. 339, 6 S.Ct. 74, 29 L.Ed. 432 (1885); Dunlop v. United States, 165 U.S. 486, 17 S.Ct. 375, 41 L.Ed. 799 (1897); and United States v. State of Washington, 233 F.2d 811, 816 (9th Cir., 1956).