I.R.C. § 446(a) General Rule
Taxable income shall be computed under the method of accounting on the basis of
which the taxpayer regularly computes his income in keeping his books.
I.R.C. § 446(b) Exceptions
If no method of accounting has been regularly used by the taxpayer, or if the method
used does not clearly reflect income, the computation of taxable income shall be
made under such method as, in the opinion of the Secretary, does clearly reflect
I.R.C. § 446(c) Permissible Methods
Subject to the provisions of subsections (a) and (b), a taxpayer may compute taxable
income under any of the following methods of accounting—
I.R.C. § 446(c)(4)
any combination of the foregoing methods permitted under regulations prescribed
by the Secretary.
I.R.C. § 446(d) Taxpayer Engaged In More Than One Business
A taxpayer engaged in more than one trade or business may, in computing taxable
income, use a different method of accounting for each trade or business.
I.R.C. § 446(e) Requirement Respecting Change Of Accounting Method
Except as otherwise expressly provided in this chapter, a taxpayer who changes the
method of accounting on the basis of which he regularly computes his income in keeping
his books shall, before computing his taxable income under the new method, secure
the consent of the Secretary.
I.R.C. § 446(f) Failure To Request Change Of Method Of Accounting
If the taxpayer does not file with the Secretary a request to change the method
of accounting, the absence of the consent of the Secretary to a change in the method
of accounting shall not be taken into account—
I.R.C. § 446(f)(1)
to prevent the imposition of any penalty, or the addition of any amount to tax,
under this title, or
(Aug. 16, 1954, ch. 736, 68A Stat. 151; Oct. 4, 1976,
Pub. L. 94-455, title XIX, 1906 (b)(13)(A), 90 Stat. 1834; July 18, 1984, Pub. L. 98-369, div. A, title I, 161(a), 98 Stat. 696.)
1986--Pub. L. 99-514, title VIII, 801(c), Oct. 22, 1986, 100 Stat. 2348, added item 448.
1976--Pub. L. 94-455, title II, 207(c)(1)(B), Oct. 4, 1976, 90 Stat. 1541, added item 447.
1984--Subsec. (f). Pub. L. 98-369 added subsec. (f).
1976--Subsecs. (b), (c),
(e). Pub. L. 94-455 struck out “or his delegate” after “Secretary”.
EFFECTIVE DATE OF 1984 AMENDMENT
Section 161(b) of Pub. L. 98-369 provided that:
“The amendment made by this section [amending this section] shall apply to taxable
years beginning after the date of the enactment of this Act [July 18, 1984].”
CLARIFICATION OF TREATMENT OF CONTRIBUTIONS TO MULTIEMPLOYER PLAN
Sec. 658 of Pub. L. 107-16 provided that:
“(a) NOT CONSIDERED METHOD OF ACCOUNTING.--For purposes of section 446 of the
Internal Revenue Code
of 1986, a determination under section 404(a)(6) of such Code regarding the taxable
year with respect to which a contribution to a multiemployer pension plan is deemed
made shall not be treated as a method of accounting of the taxpayer. No deduction
shall be allowed for any taxable year for any contribution to a multiemployer pension
plan with respect to which a deduction was previously allowed.
“(b) REGULATIONS.--The Secretary of the Treasury shall promulgate such regulations
as necessary to clarify that a taxpayer shall not be allowed an aggregate amount of
deductions for contributions to a multiemployer pension plan which exceeds the amount
of such contributions made or deemed made under section 404(a)(6) of the Internal Revenue Code
of 1986 to such plan.
“(c) EFFECTIVE DATE.--Subsection (a), and any regulations promulgated under
subsection (b), shall be effective for years ending after the date of the enactment
of this Act.”