Page:United States Statutes at Large Volume 68A.djvu/191

 CH. 1—NORMAL TAXES AND SURTAXES

151

months after the first day of the short period. Such application, in case the return was filed without regard to this paragraph, shall be considered a claim for credit or refund with respect to the amount by which the tax is reduced under this paragraph. (D) REGULATIONS.—The Secretary or his delegate shall prescribe such regulations as he deems necessary for the application of this paragraph. (c) ADJUSTMENT IN DEDUCTION FOE PERSONAL E X E M P T I O N. — I n

the case of a taxpayer other than a corporation, if a return is made for a short period by reason of subsection (a)(1) and if the tax is not computed under subsection (b)(2), then the exemptions allowed as a deduction under section 151 (and any deduction in lieu thereof) shall be reduced to amounts which bear the same ratio to the full exemptions as the number of months in the short period bears to 12. (d) CROSS R E F E R E N C E S. — For inapplicability of subsection (b) in computing— (1) Accumulated earnings tax, see section 536. (2) Personal holding company tax, see section 546. (3) Undistributed foreign personal holding company income, see section 557. (4) The taxable income of a regulated investment company, see section 852(b)(2)(E).

PART II—METHODS OF ACCOUNTING Subpart Subpart Subpart Subpart

A. B. C. D.

Methods of accounting in general. Taxable year for which items of gross income included. Taxable year for which deductions taken. Inventories.

Subpart A—Methods of Accounting in General Sec. 446. General rule for methods of accounting. SEC. 446. GENERAL RULE FOR METHODS OF ACCOUNTING. (a) GENERAL RULE.—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. (b) EXCEPTIONS.—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 or his delegate, does clearly reflect income. (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; or (4) any combination of the foregoing methods permitted under regulations prescribed by the Secretary or his delegate. (d) TAXPAYER ENGAGED IN M O R E THAN O N E BUSINESS.—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. § 446(d)

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