In this lesson, we'll touch on the accrual method of tax accounting. As we learned in our lesson on the cash method, a taxpayer using the cash method of tax accounting generally reports income for the year it's received and claims deductions for the year the corresponding expenses are paid. See 26 C.F.R. § 1.446–1(c)(1)(ii). Very often, that's not true of the accrual method, though it sometimes is.

Reporting Income Generally

An accrual-method taxpayer must report income for the year in which...