The Accrual Method

The Accrual Method

Learn about the complex and technically demanding accrual method of taxpayer accounting.


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...