Page:United States Statutes at Large Volume 68A.djvu/192

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INTERNAL REVENUE CODE OF 1954

(e) REQUIREMENT RESPECTING CHANGE OF ACCOUNTING M E T H O D. —

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 or his delegate. Subpart B—Taxable Year for Which Items of Gross Income Included Sec. Sec. Sec. Sec.

451. 452. 453. 454.

General rule for taxable year of inclusion. Prepaid income. Installment method. Obligations issued at discount.

SEC. 451. GENERAL RULE FOR TAXABLE YEAR OF INCLUSION. (a) GENERAL RULE. — The amount of any item of gross income shall

be included in the gross income for the taxable year in which received by the taxpayer, unless, under the method of accounting used in computing taxable income, such amount is to be properly accounted for as of a different period. (b) SPECIAL RULE IN C A S E OF D E A T H. — I n the case of the death of a taxpayer whose taxable income is computed under an accrual method of accounting, any amount accrued only by reason of the death of the taxpayer shall not be included in computing taxable income for the period in which falls the date of the taxpayer's death. SEC. 452. PREPAID INCOME. (a) PREPAID INCOME TO B E EARNED OVER SHORT OR INDEFINITE PERIOD.— (1) SHORT PERIOD.—In the case of any prepaid income to which

this section applies, if the liability described in subsection (e)(2) is (at the time the income is received) to end before the first day of the sixth taxable year after the taxable year in which such income is received, then such income shall be included in gross income for the taxable year in which received, and for each of the 5 succeeding taxable years, to the extent proper under the method of accounting used under section 446 in computing taxable income for such year. If the liability does not in fact end before the first day of such sixth taxable year, such income shall be included in gross income for the taxable years specified in the preceding sentence except that with the consent of the Secretary or his delegate it shall be included in gross income in such proportions, and for such taxable years, as are specified in such consent. (2) INDEFINITE PERIOD.^—In the case of any prepaid income to which this section applies, if the liability described in subsection (e)(2) is (at the time the income is received) of indefinite duration, then such income shall be included in gross income for the taxable year in which received and for each of the 5 succeeding taxable years, consistently with the principles prescribed in paragraph (1) and subsection (b), under regulations prescribed by the Secretary or his delegate. With the consent of the Secretary or his delegate the prepaid income shall be included in gross income in such proportions, and for such taxable years, as are specified in such consent. (b) PREPAID INCOME TO B E EARNED OVER LONG P E R I O D. — I n

the case of any prepaid income to which this section applies, if the § 446(e)

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