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Publication 334

Chapter 2
Accounting Periods and Methods(p11)


You must figure your taxable income and file an income tax return for an annual accounting period called a tax year. Also, you must consistently use an accounting method that clearly shows your income and expenses for the tax year.


Useful items

You may want to see:

 538 Accounting Periods and Methods
See chapter 12 for information about getting publications and forms.

Accounting Periods(p11)

When preparing a statement of income and expenses (generally your income tax return), you must use your books and records for a specific interval of time called an accounting period. The annual accounting period for your income tax return is called a tax year. You can use one of the following tax years. Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year. A required tax year is a tax year required under the Internal Revenue Code or the Income Tax Regulations.

Calendar tax year.(p12)

A calendar tax year is 12 consecutive months beginning January 1 and ending December 31.
You must adopt the calendar tax year if any of the following apply.
If you filed your first income tax return using the calendar tax year and you later begin business as a sole proprietor, you must continue to use the calendar tax year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. For more information, see Change in tax year, later.
If you adopt the calendar tax year, you must maintain your books and records and report your income and expenses for the period from January 1 through December 31 of each year.

Fiscal tax year.(p12)

A fiscal tax year is 12 consecutive months ending on the last day of any month except December. A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month.
If you adopt a fiscal tax year, you must maintain your books and records and report your income and expenses using the same tax year.
For more information on a fiscal tax year, including a 52-53-week tax year, see Pub. 538.

Change in tax year.(p12)

Generally, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year, to request IRS approval to change your tax year. See Instructions for Form 1128 for exceptions. If you qualify for an automatic approval request, a user fee is not required. If you do not qualify for automatic approval, a ruling must be requested. See Instructions for Form 1128 for information about user fees if you are requesting a ruling.