Internal Revenue Code · 26 U.S.C.
§ 446. General rule for methods of accounting
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 446
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- October 4, 1976 by Pub. L. 94–455
- Last amended
- July 18, 1984 by Pub. L. 98–369
- Amendments
- 1 dated changes in the source credit
- Length
- 6 subsections · 334 words · about 1 min to read
- Cross-references
- cites 0; cited by 2 Code sections and 102 other regulations
- Regulations
- 8 issued under this section
¶(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.
¶(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.
¶(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—
¶(1) the cash receipts and disbursements method;
¶(2) an accrual method;
¶(3) any other method permitted by this chapter; or
¶(4) any combination of the foregoing methods permitted under regulations prescribed by the Secretary.
¶(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.
¶(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.
¶(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—
¶(1) to prevent the imposition of any penalty, or the addition of any amount to tax, under this title, or
¶(2) to diminish the amount of such penalty or addition to tax.
(Aug. 16, 1954, ch. 736, 68A Stat. 151; Pub. L. 94–455, title XIX, § 1906 (b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 98–369, div. A, title I, § 161(a), July 18, 1984, 98 Stat. 696.)
Regulations under this section
Treasury regulations (26 CFR) issued under § 446
- § 1.446-1 General rule for methods of accounting.
- § 1.446-2 Method of accounting for interest.
- § 1.446-3 Notional principal contracts.
- § 1.446-3T Notional principal contracts (temporary).
- § 1.446-4 Hedging transactions.
- § 1.446-5 Debt issuance costs.
- § 1.446-6 REMIC inducement fees.
- § 1.446-7 Net asset value method for certain money market fund shares.
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
Cited by 2 Code sections
- § 404A(g)(4) Deduction for certain foreign deferred compensation plans
- § 6110(g)(5)(B)(iii) Public inspection of written determinations
Cited in 102 regulations not issued under it
- § 1.46-5 Qualified progress expenditures.
- § 1.56(g)-1 Adjusted current earnings.
- § 1.59A-3 Base erosion payments and base erosion tax benefits.
- § 1.61-4 Gross income of farmers.
- § 1.83-6 Deduction by employer.
- § 1.162-3 Materials and supplies.
- § 1.162-4 Repairs.
- § 1.162-12 Expenses of farmers.
- § 1.163-12 Deduction of original issue discount on instrument held by related foreign person.
- § 1.166-1 Bad debts.
- § 1.166-2 Evidence of worthlessness.
- § 1.167(a)-4 Leased property.
- § 1.167(a)-11 Depreciation based on class lives and asset depreciation ranges for property placed in service after December 31, 1970.
- § 1.167(b)-0 Methods of computing depreciation.
- § 1.167(d)-1 Agreement as to useful life and rates of depreciation.
- § 1.167(e)-1 Change in method.
- § 1.167(l)-1 Limitations on reasonable allowance in case of property of certain public utilities.
- § 1.168(i)-1 General asset accounts.
- § 1.168(i)-4 Changes in use.
- § 1.168(i)-6 Like-kind exchanges and involuntary conversions.
- § 1.168(i)-7 Accounting for MACRS property.
- § 1.168(i)-8 Dispositions of MACRS property.
- § 1.168(k)-1 Additional first year depreciation deduction.
- § 1.168(k)-2 Additional first year depreciation deduction for property acquired and placed in service after September 27, 2017.
Show 78 more
- § 1.179-5 Time and manner of making election.
- § 1.179B-1T Deduction for capital costs incurred in complying with Environmental Protection Agency sulfur regulations (temporary).
- § 1.195-1 Election to amortize start-up expenditures.
- § 1.197-2 Amortization of goodwill and certain other intangibles.
- § 1.248-1 Election to amortize organizational expenditures.
- § 1.263(a)-1 Capital expenditures; in general.
- § 1.263(a)-2 Amounts paid to acquire or produce tangible property.
- § 1.263(a)-3 Amounts paid to improve tangible property.
- § 1.263A-1 Uniform capitalization of costs.
- § 1.263A-2 Rules relating to property produced by the taxpayer.
- § 1.263A-3 Rules relating to property acquired for resale.
- § 1.263A-4 Rules for property produced in a farming business.
- § 1.263A-9 The avoided cost method.
- § 1.263A-15 Effective dates, transitional rules, and anti-abuse rule.
- § 1.267(a)-1 Deductions disallowed.
- § 1.267(a)-3 Deduction of amounts owed to related foreign persons.
- § 1.280F-6 Special rules and definitions.
- § 1.381(c)(4)-1 Method of accounting.
- § 1.381(c)(5)-1 Inventory method.
- § 1.404(a)-14 Special rules in connection with the Employee Retirement Income Security Act of 1974.
- § 1.441-1 Period for computation of taxable income.
- § 1.448-1T Limitation on the use of the cash receipts and disbursements method of accounting (temporary).
- § 1.448-2 Limitation on the use of the cash receipts and disbursements method of accounting for taxable years beginning after December 31, 2017.
- § 1.448-3 Nonaccrual of certain amounts by service providers.
- § 1.451-3 Timing of income inclusion for taxpayers with an applicable financial statement using an accrual method of accounting.
- § 1.451-6 Election to include crop insurance proceeds in gross income in the taxable year following the taxable year of destruction or damage.
- § 1.451-8 Advance payments for goods, services, and certain other items.
- § 1.453A-1 Installment method of reporting income by dealers on personal property.
- § 1.454-1 Obligations issued at discount.
- § 1.455-2 Scope of election under section 455.
- § 1.455-6 Time and manner of making election.
- § 1.456-2 Scope of election under section 456.
- § 1.456-6 Time and manner of making election.
- § 1.460-1 Long-term contracts.
- § 1.460-3 Long-term construction contracts.
- § 1.460-4 Methods of accounting for long-term contracts.
- § 1.460-5 Cost allocation rules.
- § 1.461-1 General rule for taxable year of deduction.
- § 1.461-5 Recurring item exception.
- § 1.467-1 Treatment of lessors and lessees generally.
- § 1.467-8 Automatic consent to change to constant rental accrual for certain rental agreements.
- § 1.468B-2 Taxation of qualified settlement funds and related administrative requirements.
- § 1.468B-9 Disputed ownership funds.
- § 1.471-1 Need for inventories.
- § 1.471-11 Inventories of manufacturers.
- § 1.472-8 Dollar-value method of pricing LIFO inventories.
- § 1.481-1 Adjustments in general.
- § 1.509(a)-4 Supporting organizations.
- § 1.512(a)-1 Definition.
- § 1.512(b)-1 Modifications.
- § 1.522-2 Manner of taxation of cooperative associations subject to section 522.
- § 1.612-3 Depletion; treatment of bonus and advanced royalty.
- § 1.709-1 Treatment of organization and syndication costs.
- § 1.752-2 Partner's share of recourse liabilities.
- § 1.761-2 Exclusion of certain unincorporated organizations from the application of all or part of subchapter K of chapter 1 of the Internal Revenue Code.
- § 1.818-2 Accounting provisions.
- § 1.832-4 Gross income.
- § 1.861-18 Classification of, and source of gross income from, digital content transactions.
- § 1.861-19 Classification of cloud transactions.
- § 1.872-2 Exclusions from gross income of nonresident alien individuals.
- § 1.905-1 When credit for foreign income taxes may be taken.
- § 1.964-1 Determination of the earnings and profits of a foreign corporation.
- § 1.987-1 Scope, definitions, and special rules.
- § 1.987-10 Transition rules.
- § 1.988-2 Recognition and computation of exchange gain or loss.
- § 1.991-1 Taxation of a domestic international sales corporation.
- § 1.1012-1 Basis of property.
- § 1.1016-3 Exhaustion, wear and tear, obsolescence, amortization, and depletion for periods since February 28, 1913.
- § 1.1377-1 Pro rata share.
- § 1.1400L(b)-1 Additional first year depreciation deduction for qualified New York Liberty Zone property.
- § 1.1502-13 Intercompany transactions.
- § 1.1502-17 Methods of accounting.
- § 1.1502-68 Additional first year depreciation deduction for property acquired and placed in service after September 27, 2017.
- § 53.4942(a)-3 Qualifying distributions defined.
- § 53.4965-8 Definition of net income and proceeds and standard for allocating net income or proceeds to various periods.
- § 301.6110-1 Public inspection of written determinations and background file documents.
- § 601.106 Appeals functions.
- § 601.204 Changes in accounting periods and in methods of accounting.
Amendment history
From the source credit and the official notes, newest first.
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter E Accounting Periods and Methods of Accounting
- Part II METHODS OF ACCOUNTING
- Subpart A Methods of Accounting in General
Nearby sections
- § 446 General rule for methods of accounting
- § 447 Method of accounting for corporations engaged in farming
- § 448 Limitation on use of cash method of accounting
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
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”.
Statutory Notes and Related Subsidiaries
Effective Date of 1984 Amendment
Pub. L. 98–369, div. A, title I, § 161(b), July 18, 1984, 98 Stat. 697, 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].”