§441 — Period for computation of taxable income
45 cases·4 followed·2 distinguished·1 overruled·38 cited—9% support
Statute Text — 26 U.S.C. §441
Taxable income shall be computed on the basis of the taxpayer’s taxable year.
For purposes of this subtitle, the term “taxable year” means—
the taxpayer’s annual accounting period, if it is a calendar year or a fiscal year;
the calendar year, if subsection (g) applies;
the period for which the return is made, if a return is made for a period of less than 12 months; or
in the case of a DISC filing a return for a period of at least 12 months, the period determined under subsection (h).
For purposes of this subtitle, the term “annual accounting period” means the annual period on the basis of which the taxpayer regularly computes his income in keeping his books.
For purposes of this subtitle, the term “calendar year” means a period of 12 months ending on December 31.
For purposes of this subtitle, the term “fiscal year” means a period of 12 months ending on the last day of any month other than December. In the case of any taxpayer who has made the election provided by subsection (f) the term means the annual period (varying from 52 to 53 weeks) so elected.
A taxpayer who, in keeping his books, regularly computes his income on the basis of an annual period which varies from 52 to 53 weeks and ends always on the same day of the week and ends always—
on whatever date such same day of the week last occurs in a calendar month, or
on whatever date such same day of the week falls which is nearest to the last day of a calendar month,
may (in accordance with the regulations prescribed under paragraph (3)) elect to compute his taxable income for purposes of this subtitle on the basis of such annual period. This paragraph shall apply to taxable years ending after the date of the enactment of this title.
In any case in which the effective date or the applicability of any provision of this title is expressed in terms of taxable years beginning, including, or ending with reference to a specified date which is the first or last day of a month, a taxable year described in paragraph (1) shall (except for purposes of the computation under section 15) be treated—
as beginning with the first day of the calendar month beginning nearest to the first day of such taxable year, or
as ending with the last day of the calendar month ending nearest to the last day of such taxable year,
as the case may be.
In the case of a change from or to a taxable year described in paragraph (1)—
if such change results in a short period (within the meaning of section 443) of 359 days or more, or of less than 7 days, section 443(b) (relating to alternative tax computation) shall not apply;
if such change results in a short period of less than 7 days, such short period shall, for purposes of this subtitle, be added to and deemed a part of the following taxable year; and
if such change results in a short period to which subsection (b) of section 443 applies, the taxable income for such short period shall be placed on an annual basis for purposes of such subsection by multiplying the gross income for such short period (minus the deductions allowed by this chapter for the short period, but only the adjusted amount of the deductions for personal exemptions as described in section 443(c)) by 365, by dividing the result by the number of days in the short period, and the tax shall be the same part of the tax computed on the annual basis as the number of days in the short period is of 365 days.
The Secretary may by regulation provide terms and conditions for the application of this subsection to a partnership, S corporation, or personal service corporation (within the meaning of section 441(i)(2)).
The Secretary shall prescribe such regulations as he deems necessary for the application of this subsection.
Except as provided in section 443 (relating to returns for periods of less than 12 months), the taxpayer’s taxable year shall be the calendar year if—
the taxpayer keeps no books;
the taxpayer does not have an annual accounting period; or
the taxpayer has an annual accounting period, but such period does not qualify as a fiscal year.
For purposes of this subtitle, the taxable year of any DISC shall be the taxable year of that shareholder (or group of shareholders with the same 12-month taxable year) who has the highest percentage of voting power.
If 2 or more shareholders (or groups) have the highest percentage of voting power under paragraph (1), the taxable year of the DISC shall be the same 12-month period as that of any such shareholder (or group).
The Secretary shall prescribe regulations under which paragraphs (1) and (2) shall apply to a change of ownership of a corporation after the taxable year of the corporation has been determined under paragraph (1) or (2) only if such change is a substantial change of ownership.
For purposes of this subsection, voting power shall be determined on the basis of total combined voting power of all classes of stock of the corporation entitled to vote.
For purposes of this subtitle, the taxable year of any personal service corporation shall be the calendar year unless the corporation establishes, to the satisfaction of the Secretary, a business purpose for having a different period for its taxable year. For purposes of this paragraph, any deferral of income to shareholders shall not be treated as a business purpose.
For purposes of this subsection, the term “personal service corporation” has the meaning given such term by section 269A(b)(1), except that section 269A(b)(2) shall be applied—
by substituting “any” for “more than 10 percent”, and
by substituting “any” for “50 percent or more in value” in section 318(a)(2)(C).
A corporation shall not be treated as a personal service corporation unless more than 10 percent of the stock (by value) in such corporation is held by employee-owners (within the meaning of section 269A(b)(2), as modified by the preceding sentence). If a corporation is a member of an affiliated group filing a consolidated return, all members of such group shall be taken into account in determining whether such corporation is a personal service corporation.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.441-0 Table of contents
- Treas. Reg. §Treas. Reg. §1.441-0(a) Taxable year.
- Treas. Reg. §Treas. Reg. §1.441-0(b) Adoption, change, or retention of taxable year.
- Treas. Reg. §Treas. Reg. §1.441-0(c) Personal service corporation defined.
- Treas. Reg. §Treas. Reg. §1.441-0(d) Performance of personal services.
- Treas. Reg. §Treas. Reg. §1.441-0(e) Principal activity.
- Treas. Reg. §Treas. Reg. §1.441-0(f) Services substantially performed by employee-owners.
- Treas. Reg. §Treas. Reg. §1.441-0(g) Employee-owner defined.
- Treas. Reg. §Treas. Reg. §1.441-0(h) Special rules for affiliated groups filing consolidated returns.
- Treas. Reg. §Treas. Reg. §1.441-0(i) Employees involved only in the performance of personal services.
- Treas. Reg. §Treas. Reg. §1.441-1 Period for computation of taxable income
- Treas. Reg. §Treas. Reg. §1.441-1(a) Computation of taxable income—(1) In general.
- Treas. Reg. §Treas. Reg. §1.441-1(b) General rules and definitions.
- Treas. Reg. §Treas. Reg. §1.441-1(c) Adoption of taxable year—(1) In general.
- Treas. Reg. §Treas. Reg. §1.441-1(d) Retention of taxable year.
- Treas. Reg. §Treas. Reg. §1.441-1(e) Change of taxable year.
- Treas. Reg. §Treas. Reg. §1.441-1(f) Obtaining approval of the Commissioner or making a section 444 election.
- Treas. Reg. §Treas. Reg. §1.441-1(i) The period for which a return is made, if a return is made for a period of less than 12 months (short period).
- Treas. Reg. §Treas. Reg. §1.441-2 Election of taxable year consisting of 52-53 weeks
- Treas. Reg. §Treas. Reg. §1.441-2(a) In general—(1) Election.
- Treas. Reg. §Treas. Reg. §1.441-2(b) Procedures to elect a 52-53-week taxable year—(1) Adoption of a 52-53-week taxable year—(i) In general.
- Treas. Reg. §Treas. Reg. §1.441-2(c) Application of effective dates—(1) In general.
- Treas. Reg. §Treas. Reg. §1.441-2(d) Computation of taxable income.
- Treas. Reg. §Treas. Reg. §1.441-2(e) Treatment of taxable years ending with reference to the same calendar month—(1) Pass-through entities.
- Treas. Reg. §Treas. Reg. §1.441-2(i) §1.441-2(i)
45 Citing Cases
- 23 - Moreover, even if the payment from Sanrio could have been characterized as a capital gain rather than ordinary income, section 441 requires a taxpayer to report taxable income on the basis of a taxable year.
86(e)(1); see also Robbins v.
at 3126; emphasis added.] 2°In Kuretski v. Commissioner, 755 F.3d at 938, the Court ofAppeals said the taxpayer in that case contended that the Tax Court exercisesjudicial power under Article III. It is not apparent to us that the taxpayers in that case made that obviously incorrect argument. In fact, in their answering briefat
441; see also sec. 446(c). Jani-King spread its deductions over two years because the amounts wbre paid over two years. (All section references are to the Internal Revenue Code in effect for the year in issue, unless otherwise indicated. All Rule references are to the Tax Court Rules ofPractice and Procedure.) - 6 - [*6] when he filed his pet
D May 14 2009 - 2 2001 ; (2) whether petitioner had unreported income from the pay phone and ATM activity for 2001 ; (3) whether gross receipts from the pay phone and ATM activity that petitioner reported on his -2000.Schedule C should be reclassified as other income ; and (4) whether petitioner is entitled to claim a disabled access credit under section 441 for 2000 and 2001 .
Section 441 of the Restatement (Second), Agency (1958) states: Unless the relation of the parties, the triviality of the services, or other circumstances, indicate that the parties have agreed otherwise, it is inferred that a person promises to pay for services which he requests or permits another to perform for him as his agent. A plaintiff may re
s, 553 So. 2d 79, 82 (Ala. 1989) (breach of contract occurs when a party to a contract fails to do a particular thing that he or she promised to do); Seybold v. Magnolia Land Co., 376 So. 2d 1083, 1085 (Ala. 1979) (same); 17A Am. Jur. 2d, Contracts, sec. 441 (1991), not in terms which indicate that they sought relief for personal injuries or sickness. Neither petitioners’ complaints nor the nature of their claims support their contention that United’s payments to them were on account of personal
s, 553 So. 2d 79, 82 (Ala. 1989) (breach of contract occurs when a party to a contract fails to do a particular thing that he or she promised to do); Seybold v. Magnolia Land Co., 376 So. 2d 1083, 1085 (Ala. 1979) (same); 17A Am. Jur. 2d, Contracts, sec. 441 (1991), not in terms which indicate that they sought relief for personal injuries or sickness. Neither petitioners’ complaints nor the nature of their claims support their contention that United’s payments to them were on account of personal
- 13 - Because petitioner under section 441 elected a "52-53 week" taxable year, petitioner's consolidated corporate Federal income tax returns for each of 1990 through 1994 accurately reflected petitioner's taxable years beginning and ending on different dates in late June and July (i.e., on the Sunday nearest the last day of June of each year).
Sanford & Brooks Co., 282 U.S. 359 (1931). Consistent with annual accounting, Epps and Stovall hold that the distributed amount is the net amount distributed each year, not the net amount distributed over multiple years. See also Leaf v. Commissioner, 33 T.C. 1093, 1096 (1960) (repayment in later year had no effect on the taxpay