26 U.S.C. § 446
Section 446 · General rule for methods of accounting
Amended 3 times on record
Applied in 382 court decisions — leading case Thor Power Tool Company v. Commissioner of Internal Revenue (1979)
Most recently applied in Conmac Investments, Inc. v. CIR (June 2025)
Cases citing this section usually also cite 26 U.S.C. § 162 · 26 U.S.C. § 461 · 26 U.S.C. § 481
How often courts cite this section
Court decisions citing this, by year.Markers show enactment, consequential amendments, and circuit splits over this section — watch for a citation surge after a change or a disagreement. The dip in the last several years is a data-coverage gap, not a real trend — our corpus holds fewer opinions from the most recent years, so recent citations are undercounted.
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.
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.
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.
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.
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.
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.
Editorial notes U.S. Code · Office of the Law Revision Counsel
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].”
Cross References
Period for computation of taxable income, see section 441 of this title.