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Internal Revenue Code, § 446. General Rule For Methods Of Accounting

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 income.
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)(1)
the cash receipts and disbursements method;
I.R.C. § 446(c)(2)
an accrual method;
I.R.C. § 446(c)(3)
any other method permitted by this chapter; or
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
I.R.C. § 446(f)(2)
to diminish the amount of such penalty or addition to tax.
(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.)
BACKGROUND NOTES
Amendments to Subpart
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.
AMENDMENTS
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.”