26 U.S.C. § 446 — General rule for methods of accounting

(a) General rule -- Taxable income is computed using whatever accounting method the taxpayer regularly uses to figure income in their own books. (b) Exceptions -- If the taxpayer hasn't regularly used any accounting method, or if the method used doesn't clearly reflect income, the Secretary decides what method must be used instead -- one that, in the Secretary's opinion, does clearly reflect income. (c) Permissible methods -- Subject to (a) and (b), a taxpayer can compute taxable income under any of these methods: (1) the cash receipts and disbursements method; (2) an accrual method; (3) any other method this chapter permits; or (4) any combination of these methods, if regulations the Secretary prescribes allow it. (d) Taxpayer engaged in more than one business -- A taxpayer in more than one trade or business can use a different accounting method for each one. (e) Requirement respecting change of accounting method -- Except where this chapter expressly says otherwise, a taxpayer who wants to change the accounting method used in their own books must secure the Secretary's consent before computing taxable income under the new method. (f) Failure to request change of method of accounting -- If a taxpayer never files a request with the Secretary to change accounting methods, the fact that the Secretary never consented can't be used: (1) to prevent a penalty or an addition to tax from applying under this title, or (2) to reduce the amount of that penalty or addition to tax.