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.
26 U.S. Code § 446. General rule for methods of accounting
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(a) General rule
(c) Permissible methodsSubject to the provisions of subsections (a) and (b), a taxpayer may compute taxable income under any of the following methods of accounting—
the cash receipts and disbursements method;
any combination of the foregoing methods permitted under regulations prescribed by the Secretary.
(d) Taxpayer engaged in more than one business
(e) Requirement respecting change of accounting method
(f) Failure to request change of method of accountingIf 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—
to prevent the imposition of any penalty, or the addition of any amount to tax, under this title, or
to diminish the amount of such penalty or addition to tax.
1984—Subsec. (f). Pub. L. 98–369 added subsec. (f).