Accounting Periods (Portfolio 574)

Description

Tax Management Portfolio, Accounting Periods No. 574, discusses the tax considerations when a taxpayer adopts, or changes to, a particular taxable year. Liability for federal income tax is determinable only with reference to a taxable year. Sections 441, 442, 443, and their regulations, as well as a series of comprehensive IRS Revenue Procedures, establish the basic framework for selecting and changing taxable years. In addition, Congress has adopted a number of Code provisions restricting the taxable years available to many taxpayers.

These provisions serve to eliminate perceived abusive discrepancies between entities’ taxable years and their owners’ taxable years. This Portfolio divides the subject of taxable years into seven general areas: basic definitions relating to taxable years, restrictions on the taxable years available to numerous taxpayers, 52-53-week taxable years, the selection of an initial taxable year, the procedures for changing (and in some cases retaining) an existing taxable year, rules governing short taxable years, and rules governing a taxpayer’s final taxable year. Within these areas, this Portfolio addresses these topics with respect to individuals, corporations, partnerships, and various other special entities.

Table of Contents

I. Introduction
II. Status of Taxpayer as Dealer, Trader, or Investor
III. General Description of Exchange Mechanics; Basic Tax Rules
IV. Wash Sales; Constructive Sales; Constructive Ownership Provisions
V. Straddles
VI. The § 1092 Regulations
VII. Exotics, Notional Principal Contracts, International Aspects
VIII. Investment Incentives Related to Ownership of Stock
IX. Backup Withholding Requirements