Discussion:Tax year vs operating year
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Discussion Forum Index --> Tax Questions --> Tax year vs operating year
| 25 June 2007 | |
| Does the tax year have to be the same as the operating or fiscal year of an organization?
If so and you have a corporation and change fiscal years do you have to file 2 short year returns and if so what is the time period to do them? Neil | |
| 25 June 2007 | |
| If the organization is a flowthrough entity (partnership, LLC taxed as partnership, S corporation, etc.), a personal service corporation, or one of certain other specified organizations, IRC Sec. 441 requires a calendar year unless IRS grants permission to use a different year pursuant to IRC Sec. 444. Also, of course, a member of a federal consolidated return group must report on the same year end as the common parent, and if a corporation moves from one such group to another, it may have to change its year end to conform to the new consolidated group.
If it is a C corporation not subject to a required year, its taxable year should be the same as the year on which it bases its books and records (IRC Sec. 441(b)). Once it has chosen a taxable year, however, it cannot change without IRS permission. If you have a C corporation that keeps its books on, say, a 9/30 year end, but for some reason elected when it filed its first 1120 to report on a calendar year basis, I doubt that IRS would ever require it to change, but changing to a 9/30 year would certainly simplify its compliance burden. Permission to change to a fiscal year that coincides with the taxpayer's accounting year would, I expect, routinely be granted. Such a change would require the filing of one short period return. IOW, you would file a return for the regular year ended 9/30/X1, a three-month short period return for the period from 10/1 to 12/31/X1, and a calendar year return for the year ended 12/31/X2. | |
| 25 June 2007 | |
| P.S. the due date for the short period return for the three months ending 12/31/X1 would be 3/15/X2. As I recall there is a special rule, though, for a short period return that is required because a corporation has left a consolidated return group in midyear, extending the due date for that short period to the due date of the consolidated return. | |
| 26 June 2007 | |
| If you close a corporation or partnership when does the tax return have to be completed?
Neil | |
| 26 June 2007 | |
| The final return of a corporation is due 2-1/2 months after the date the corporation is dissolved (which is not necessarily the date it liquidates or otherwise ceases doing business). For a partnership, it's 3-1/2 months from the date of dissolution. So if a calendar year corporation dissolves as of April 30, the return for the final short period is due July 15. Of course the filing date (but not the date for payment of the tax) can be extended under the normal rules. See Reg. Sec. 1.443-1(a)(2). | |
| 26 June 2007 | |
| You have 2 1/2 months, or ten weeks to complete a tax return w/o an extension. It is due the 15th day of the 3rd month after closing. | |
