Looking for a Form 1128 Templates? Download it for free!

provide a copy of the application to

the 25-percent test described in a,

administrative procedure published

the government counsel at the same

above. If one or more other annual

by the IRS.

time it files the application with the

accounting periods produce higher

Line 8. Answer “Yes” if the

Service Center. The application must

averages of the three percentages

partnership is a related entity that

contain the name and telephone

(rounded to 1/100 of a percent)

must concurrently change its tax year

number of the government counsel.

described in 1 above than the

as a term and condition of the

requested annual accounting period,

approval of the taxpayer’s request to

If the answer to question 4 is “No”

then the requested annual accounting

change its tax year.

because the applicant (or a partner or

period will not qualify as the

shareholder) is under examination

Section C—Individuals

taxpayer’s natural business year.

and has not obtained the appropriate

3. Special rules:

director’s consent to the change or

Line 9. If the answer to question 9 is

retention of the applicant’s annual

a. To apply the 25-percent gross

“Yes,” and the restrictions of section

accounting period or the applicant is

receipts test for any particular year,

4.02 of Rev. Proc. 2003-62 (or its

before an appeals office or Federal

the taxpayer must compute its gross

successor) do not apply, sign Form

court and the applicant’s annual

receipts under the method of

1128 and see Part II—Automatic

accounting period is an issue under

accounting used to prepare its federal

Approval Request above under

consideration by the appeals office or

income tax returns for such tax year.

Where To File. Do not complete Part

Federal court, do not complete Part

III. If the answer to question 9 is

b. If the taxpayer has a

III.

“No,” go to Section A of Part III.

predecessor organization and is

continuing the same business as its

If the answer to question 4 is “No”

Section D—Tax-Exempt

predecessor, the taxpayer must use

solely because of a prior change as

Organizations

the gross receipts of its predecessor

described in item (5) above, go to

for purposes of computing the

A tax-exempt organization can

Part III after completing Section B.

25-percent gross receipts test.

request a change to its tax year under

If the answer to question 4 is “Yes”

the simplified method of either Rev.

c. If the taxpayer (including any

(and the answer to question 5, 6, or 7

Proc. 85-58 or Rev. Proc. 76-10.

predecessor organization) does not

is also “Yes”), sign Form 1128 and

have a 47-month period of gross

Under Rev. Proc. 85-58, an

see Part II—Automatic Approval

receipts (36-month period for the

organization exempt under section

Request under Where To File, above.

requested tax year plus an additional

501(a) does not have to file Form

Do not complete Part III. If the answer

11-month period for comparing the

1128 unless the following conditions

to question 4 is “Yes” (and the

requested tax year with other

described in section 3.03 of Rev.

answer to question 5, 6, or 7 is “No”),

potential tax years), then it cannot

Proc. 85-58 apply:

go to Part III after completing Section

establish a natural business year

1. The organization was required

under this revenue procedure.

to file an annual information return or

Line 6. A partnership, S corporation,

d. If the requested tax year is a

Form 990-T, Exempt Organization

electing S corporation, or PSC

52-53-week tax year, the calendar

Business Income Tax Return, at any

establishes a ‘‘natural business year’’

month ending nearest to the last day

time during the last 10 calendar

under Rev. Proc. 2006-46 by

of the 52-53-week tax year is treated

years; and

satisfying the following ‘‘25-percent

as the last month of the requested tax

2. The organization has changed

gross receipts test.’’ The applicant

year for purposes of computing the

its tax year at any time within the last

must supply its gross receipts for the

25-percent gross receipts test.

10 calendar years ending with the

most recent 47 months (or for any

calendar year that includes the

predecessor) to compute the 25

Line 7. For an S corporation, an

beginning of the short period resulting

percent gross receipts test.

‘‘ownership tax year’’ is the tax year

from the change of tax year.

1. Prior 3 years gross receipts:

other than a calendar year (if any)

a. Gross receipts from sales and

that, as of the first day of the first

An organization described in

services for the most recent 12-month

effective year, constitutes the tax year

section 501(c) or (d) is exempt from

period that ends with the last month

of one or more shareholders

tax under section 501(a) unless the

of the requested annual accounting

(including any shareholder that

exemption is denied under section

period are totaled and then divided

concurrently changes to such tax

502 or 503.

into the amount of gross receipts from

year) holding more than 50 percent of

Rev. Proc. 85-58 does not apply

sales and services for the last 2

the corporation’s issued and

to:

months of this 12-month period.

outstanding shares of stock. For this

•

Farmers’ cooperatives exempt from

b. The same computation as in a,

purpose, a shareholder that is

federal income tax under section 521;

above is made for the two preceding

tax-exempt under section 501(a) is

•

Organizations described in

12-month periods ending with the last

disregarded if such shareholder is not

sections 526, 527, and 528;

month of the requested annual

subject to tax on any income

•

Organizations described in section

accounting period.

attributable to the S corporation.

401(a); and

2. Natural business year:

Tax-exempt shareholders are not

•

Organizations requesting a change

a. Except as provided in b, below,

disregarded, however, if the S

in a tax year on a group basis.

if each of the three results described

corporation is wholly-owned by such

A central organization should

in 1 above equals or exceeds 25

tax-exempt entities. A shareholder in

follow Rev. Proc. 76-10 to apply for a

percent, then the requested annual

an S corporation that wants to

group change in tax year for all its

accounting period is deemed to be

concurrently change its tax year must

subordinate organizations.

the taxpayer’s natural business year.

follow the instructions generally

b. The taxpayer must determine

applicable to taxpayers changing their

Rev. Proc. 76-10 does not apply

whether any annual accounting

tax years contained in Regulations

to:

•

period other than the requested

section 1.442-1(b), Rev. Proc.

Farmers’ cooperatives exempt from

annual accounting period also meets

2002-39, or any other applicable

federal income tax under section 521,

-6-

Instructions For Form 1128 - Application To Adopt, Change, Or Retain A Tax Year - 2011 Page 6

Related Articles

Related forms

Related Categories