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11. Is a corporation leaving a

year concurrently with the

partner’s or shareholder’s federal

consolidated group. The corporation

corporation’s change in tax year,

income tax return.

is precluded from using the automatic

either under Rev. Proc. 2006-45,

Note. If any of the above

approval request procedures during

2006-46, or 2002-39. This related

circumstances apply, you may still be

the consolidated group’s tax year in

party change is required

eligible under the automatic approval

which the corporation ceased to be a

notwithstanding the testing date

request procedures if you comply with

member of the consolidated group.

provisions in section 706(b)(4)(A)(ii),

the procedures explained following

See Rev. Proc. 2007-64, 2007-42

section 898(c)(3)(B), Temporary

item 5 below. See section 7.03 of

I.R.B. 818 for details.

Regulations section 1.921-1T(b)(6),

Rev. Proc. 2006-46 for more

12. Has a required tax year (for

and the special provision in section

information.

example, a real estate investment

706(b)(4)(B).

5. The entity is requesting a

trust), unless the corporation is

change to, or retention of, a natural

Section B—Partnerships, S

changing to its required tax year and

business year as described in section

is not described in items (1) through

Corporations, Personal

4.01(2) of Rev. Proc. 2006-46 if the

(11), above.

Service Corporations, and

entity has changed its annual

Trusts

accounting period at any time within

Note. If the corporation is precluded

from using the automatic approval

the most recent 48-month period

Rev. Proc. 2006-46 provides

ending with the last month of the

rules because of items (2) or (3),

exclusive procedures for a

requested tax year. For this purpose,

listed above, it can nevertheless

partnership, S corporation, PSC, or

automatically change to a natural

the following changes are not

trust within its scope to adopt,

business year that meets the

considered prior changes in annual

change, or retain its annual

accounting period: (a) a change to a

25-percent gross receipts test

accounting period under section 442

required tax year or ownership tax

described in section 5.04 of Rev.

and Regulations section 1.442-1(b).

Proc. 2006-45.

year; (b) a change from a 52-53 week

The automatic approval request

tax year to a non-52-53 week tax year

If the answer to question 1 is

procedures apply to trusts, with the

that ends with reference to the same

“Yes,” sign Form 1128 and see

exception of trusts exempt from

calendar month, and vice versa; or (c)

Part II —Automatic Approval Request

taxation under section 501(a),

a change in accounting period by an

earlier under Where To File. Do not

charitable trusts described in section

S corporation or PSC, in order to

complete Part III. If the corporation is

4947(a)(1), and grantor trusts

comply with the common tax year

requesting to change to a natural

described in Rev. Rul. 90-55,

requirements of Regulations sections

business year that satisfies the

changing to a calendar year.

1.1502-75(d)(3)(v) and 1.1502-76(a).

25-percent gross receipts test, also

include its gross receipts for the most

The rev. proc. only applies to trusts

If the answer to question 4 is

recent 47 months (or for any

that are using an incorrect tax year

“Yes,” and any of the following

predecessor).

and want to change to the required

situations apply, the applicable

calendar tax year.

If the answer to question 1 is “Yes”

additional procedures described

because the applicant is a CFC that

Line 4. A partnership, S corporation,

below must be followed.

wants to make a one-month deferral

•

PSC, or trust is precluded from using

The applicant is under examination

election under section 898(c)(2), see

the automatic approval rules under

and has obtained the consent of the

Rev. Proc. 2007-64 which modifies

section 4 of Rev. Proc. 2006-46 if any

appropriate director to the change or

the terms and conditions for this

of the following apply:

retention of the applicant’s annual

election provided in Rev. Proc.

accounting period. The applicant

1. The entity is under examination,

2006-45. If a CFC wants to revoke its

must attach to the application a

unless it obtains consent of the

one-month deferral election under

statement from the director

appropriate director as provided in

section 898(c)(2) and change its tax

consenting to the change or retention.

section 7.03(1) of Rev. Proc.

year to the majority U.S. shareholder

The applicant must also provide a

2006-46.

year (as defined in section 898(c)(3)),

copy of the application to the director

2. The entity is before an appeals

attach a statement providing the

at the same time it files the

office with respect to any income tax

names, addresses, and identifying

application with the Service Center.

issue and its annual accounting

numbers for each U.S. shareholder of

The application must contain the

period is an issue under

the foreign corporation.

name(s) and telephone number(s) of

consideration by the appeals office.

If the answer to question 1 is “No,”

the examination agent(s).

3. The entity is before a Federal

•

go to Part III after completing Section

court with respect to any income tax

The applicant is before an appeals

issue and its annual accounting

(area) office and the applicant’s

Line 3. If a corporation’s interest in a

period is an issue under

annual accounting period is not an

pass-through entity, CFC, FSC, or

consideration by the Federal court.

issue under consideration by the

IC-DISC (related entity) is

4. On the date the partnership or

appeals (area) office. The applicant

disregarded under section 4.02(2) or

S corporation would otherwise file its

must attach to the application a

4.02(3) of Rev. Proc. 2006-45

application, the partnership’s or S

separate statement signed by the

because the related entity is required

corporation’s annual accounting

applicant certifying that, to the best of

to change its tax year to the

period is an issue under

the applicant’s knowledge, the

corporation’s new tax year (or, in the

consideration in the examination of a

applicant’s annual accounting period

case of a CFC, to a tax year

partner’s or shareholders’s federal

is not an issue under consideration by

beginning one month earlier than the

income tax return or an issue under

the appeals (area) office. The

corporation’s new tax year), the

consideration by an area office or by

applicant must also provide a copy of

related entity must change its tax

a Federal court with respect to a

the application to the appeals officer

-5-

Instructions For Form 1128 - Application To Adopt, Change, Or Retain A Tax Year - Internal Revenue Service - 2008 Page 5

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