---
kind: "section"
citation: "26 U.S.C. § 446"
title: "26"
title_heading: "Internal Revenue Code"
number: "446"
heading: "General rule for methods of accounting"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/446"
units:
  - "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"
---

# §446. General rule for methods of accounting

- (a) **General rule—** [Taxable income](/usc/26/63.md?p=a) shall be computed under the method of accounting on the basis of which the [taxpayer](/usc/26/1313.md?p=b) regularly computes his income in keeping his books.
- (b) **Exceptions—** If no method of accounting has been regularly used by the [taxpayer](/usc/26/1313.md?p=b), or if the method used does not clearly reflect income, the computation of [taxable income](/usc/26/63.md?p=a) 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)](#a) and [(b)](#b), a [taxpayer](/usc/26/1313.md?p=b) may compute [taxable income](/usc/26/63.md?p=a) under any of the following methods of accounting—
  - (1) the [cash](/usc/26/856.md?p=c-5-K) 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](/usc/26/1313.md?p=b) engaged in more than one [trade or business](/usc/26/1402.md?p=c) may, in computing [taxable income](/usc/26/63.md?p=a), use a different method of accounting for each [trade or business](/usc/26/1402.md?p=c).
- (e) **Requirement respecting change of accounting method—** Except as otherwise expressly provided in this chapter, a [taxpayer](/usc/26/1313.md?p=b) 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](/usc/26/63.md?p=a) under the new method, secure the consent of the Secretary.
- (f) **Failure to request change of method of accounting—** If the [taxpayer](/usc/26/1313.md?p=b) 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.

## Source credit

(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.)

## Notes

### 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].”