Accounting 318, Chapter 16 Accounting Periods and Methods || A+
Certified.
Accounting Periods/Tax Year correct answers The tax year may be shorter but is usually not
longer than 12 months.
The taxpayer elects a tax year by the timely filing of the initial return
Permission to change taxable years must be obtained from the IRS
How long does a tax year typically run? correct answers Usually not longer than 12 month
How does a taxpayer change the tax year? correct answers They must get permission to change
the taxable year from the IRS
Types of Tax Years correct answers Calendar year: January 1st-December 31st
Fiscal year: Must start on the first day of a month and end the last day of a month, other than
December, 12 months later
52/53 week year: Ends on same day of week that is either closest to its normal monthly year-end
or occurs last in its year
Accounting Periods---Partnerships correct answers Tax year-end must be that of:
1. Majority Interest partners (Together own a greater-than-50% interest in partnership capital and
profits)
2. Principal Partners (Partner with a 5% or more interest in partnership capital or profits
, 3. Least aggregate deferral of income.
Accounting Period---S Corporations and Personal Service Corporations (PSCs) correct answers
Generally, these entities must have a calendar year.
Other tax years may be available if certain requirements can be met.
Accounting Period---Other Allowable Year-Ends correct answers Partnerships, S Corporations,
and PSCs can elect to have other fiscal year-ends if any of the following are met:
A Valid Business Purpose can be shown,
Section 444 Election is made and year-end results is no more than a 3-month deferral (Requires
certain payments)
Section 444 Election was made to retain the same year as was used for the fiscal year ending in
1987 (Requires certain payments)
Accounting Periods--Valid Business Purpose correct answers The IRS acknowledges only one
valid business purpose for using a fiscal year-end (Conforming the tax year to the entity's natural
business year {Seasonal businesses}).
Accounting Periods-- Section 444 Deferral and Required Tax Payments correct answers
Partnerships and S corporations (not their owners) must make tax payments at the highest
individual rate plus 1% point (38%) on estimated deferral period income.
The amount due is reduced by the amount of required tax payments from the previous year.
Certified.
Accounting Periods/Tax Year correct answers The tax year may be shorter but is usually not
longer than 12 months.
The taxpayer elects a tax year by the timely filing of the initial return
Permission to change taxable years must be obtained from the IRS
How long does a tax year typically run? correct answers Usually not longer than 12 month
How does a taxpayer change the tax year? correct answers They must get permission to change
the taxable year from the IRS
Types of Tax Years correct answers Calendar year: January 1st-December 31st
Fiscal year: Must start on the first day of a month and end the last day of a month, other than
December, 12 months later
52/53 week year: Ends on same day of week that is either closest to its normal monthly year-end
or occurs last in its year
Accounting Periods---Partnerships correct answers Tax year-end must be that of:
1. Majority Interest partners (Together own a greater-than-50% interest in partnership capital and
profits)
2. Principal Partners (Partner with a 5% or more interest in partnership capital or profits
, 3. Least aggregate deferral of income.
Accounting Period---S Corporations and Personal Service Corporations (PSCs) correct answers
Generally, these entities must have a calendar year.
Other tax years may be available if certain requirements can be met.
Accounting Period---Other Allowable Year-Ends correct answers Partnerships, S Corporations,
and PSCs can elect to have other fiscal year-ends if any of the following are met:
A Valid Business Purpose can be shown,
Section 444 Election is made and year-end results is no more than a 3-month deferral (Requires
certain payments)
Section 444 Election was made to retain the same year as was used for the fiscal year ending in
1987 (Requires certain payments)
Accounting Periods--Valid Business Purpose correct answers The IRS acknowledges only one
valid business purpose for using a fiscal year-end (Conforming the tax year to the entity's natural
business year {Seasonal businesses}).
Accounting Periods-- Section 444 Deferral and Required Tax Payments correct answers
Partnerships and S corporations (not their owners) must make tax payments at the highest
individual rate plus 1% point (38%) on estimated deferral period income.
The amount due is reduced by the amount of required tax payments from the previous year.
