Tax Facts

9038 / How is an S corporation’s accounting period determined?

An S corporation is generally required to adopt a calendar year accounting period (meaning that its tax year ends on December 31, see Q 9036) unless it can establish a valid business purpose for adopting an alternate accounting period.1

The business purpose test, applicable in the context of both partnerships and S corporations, is discussed in Q 9040.

1.  IRC § 1378(b).

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