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Section 1.1502-17, Income Tax Regs., entitled "Methods of
accounting", stated that "The method of accounting to be used by
each member of the group shall be determined in accordance with
the provisions of section 446 as if such member filed a separate
return."
Section 446(a) stated that "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." Section
1.446-1(a)(1), Income Tax Regs., further provided that "The term
'method of accounting' includes not only the over-all method of
accounting of the taxpayer but also the accounting treatment of
any item."
Section 446(c) listed the permissible methods of accounting:
(c) Permissible Methods.--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;
(4) any combination of the foregoing methods
permitted under regulations prescribed by the
Secretary.
See also sec. 1.446-1(c), Income Tax Regs.
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