Irc Section 446

General rule for methods of accountingtext contains those laws in effect on september 21 2020 from title 26 internal revenue codesubtitle a income taxeschapter 1 normal taxes and surtaxessubchapter e accounting periods and methods of accountingpart ii methods of accountingsubpart a methods of accounting in general.

Irc section 446. 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. 115 97 the tax cuts and jobs act or tcja the section 446 rules served primarily to set the framework for whether entities with multiple lines of business could use different accounting methods. The term method of accounting includes not only the overall method of accounting of the taxpayer but also the accounting treatment of any item.

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. Before the 2017 tax reform legislation p l. Under 1 446 1 e 2 ii a of the income tax regulations a change in a method of accounting includes a change in the overall plan of accounting for gross income or deductions or a change in the treatment of any material item used in the overall plan of accounting.