Instructions For Form 1128 - Application To Adopt, Change, Or Retain A Tax Year (Page 6 of 9) in pdf

request procedures if you comply with

The applicant is before a federal

b. The same computation as in a,

the procedures explained following

court and the applicant's annual

above, is made for the two preceding

item 5 below. See section 7.03 of

accounting period is not an issue

12-month periods ending with the last

Rev. Proc. 2006-46 for more

under consideration by the federal

month of the requested annual

information.

court. The applicant must attach to the

accounting period.

application a separate statement

5. The entity has changed its

2. Natural business year:

signed by the applicant certifying that,

annual accounting period at any time

a. Except as provided in b, below,

to the best of the applicant's

within the most recent 48-month

if each of the three results described

knowledge, the applicant's annual

period ending with the last month of

in 1 above equals or exceeds 25

accounting period is not an issue

the requested tax year. For this

percent, then the requested annual

under consideration by the federal

purpose, the following changes are

accounting period is deemed to be the

court. The applicant must also provide

not considered prior changes in

taxpayer's natural business year.

a copy of the application to the

annual accounting period: (a) a

b. The taxpayer must determine

government counsel at the same time

change to a required tax year or

whether any annual accounting period

it files the application with the Service

ownership tax year; (b) a change from

other than the requested annual

Center. The application must contain

a 52-53-week tax year to a

accounting period also meets the

the name and telephone number of

non-52-53-week tax year that ends

25-percent test described in a, above.

the government counsel.

with reference to the same calendar

If one or more other annual

month, and vice versa; or (c) a

If the answer to the question on

accounting periods produce higher

change in accounting period by an S

Part II, Section B, line 4, is “No”

averages of the three percentages

corporation or PSC, in order to comply

because the applicant (or a partner or

(rounded to 1/100 of a percent)

with the common tax year

shareholder) is under examination

described in 1 above than the

requirements of Regulations sections

and has not obtained the appropriate

requested annual accounting period,

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

director's consent to the change or

then the requested annual accounting

retention of the applicant's annual

If the answer to the question on

period will not qualify as the

accounting period or the applicant is

Part II, Section B, line 4, is “Yes,” and

taxpayer's natural business year.

before an appeals office or federal

any of the following situations apply,

3. Special rules:

court and the applicant's annual

the applicable additional procedures

accounting period is an issue under

a. To apply the 25-percent gross

described below must be followed.

consideration by the appeals office or

receipts test for any particular year,

The applicant is under examination

federal court, do not complete Part III.

the taxpayer must compute its gross

and has obtained the consent of the

receipts under the method of

If the answer to line 4 is “No” solely

appropriate director to the change or

accounting used to prepare its federal

because of a prior change as

retention of the applicant's annual

income tax returns for such tax year.

described in item (5) above, go to Part

accounting period. The applicant must

III after completing Section B.

b. If the taxpayer has a

attach to the application a statement

predecessor organization and is

from the director consenting to the

If the answer to line 4 is “Yes” (and

continuing the same business as its

change or retention. The applicant

the answer to line 5, 6, or 7 is also

predecessor, the taxpayer must use

must also provide a copy of the

“Yes”), sign Form 1128 and see Part

the gross receipts of its predecessor

application to the director at the same

II—Automatic Approval Request

for purposes of computing the

time it files the application with the

under

Where To

File, earlier. Do not

25-percent gross receipts test.

Service Center. The application must

complete Part III. If the answer to

contain the name(s) and telephone

line 4 is “Yes” (and the answer to

c. If the taxpayer (including any

number(s) of the examination

line 5, 6, or 7 is “No”), go to Part III.

predecessor organization) does not

agent(s).

have a 47-month period of gross

Line 6. A partnership, S corporation,

The applicant is before an appeals

receipts (36-month period for the

electing S corporation, or PSC

office and the applicant's annual

requested tax year plus an additional

establishes a "natural business year"

accounting period is not an issue

11-month period for comparing the

under Rev. Proc. 2006-46 by

under consideration by the appeals

requested tax year with other potential

satisfying the following "25-percent

office. The applicant must attach to

tax years), then it cannot establish a

gross receipts test." The applicant

the application a separate statement

natural business year under this

must supply its gross receipts for the

signed by the applicant certifying that,

revenue procedure.

most recent 47 months (or for any

to the best of the applicant's

d. If the requested tax year is a

predecessor) to compute the

knowledge, the applicant's annual

52-53-week tax year, the calendar

25-percent gross receipts test.

accounting period is not an issue

month ending nearest to the last day

1. Prior 3 years gross receipts:

under consideration by the appeals

of the 52-53-week tax year is treated

office. The applicant must also

a. Gross receipts from sales and

as the last month of the requested tax

provide a copy of the application to

services for the most recent 12-month

year for purposes of computing the

period that ends with the last month of

the appeals officer at the same time it

25-percent gross receipts test.

files the application with the Service

the requested annual accounting

Center. The application must contain

period are totaled and then divided

Line 7. For an S corporation, an

into the amount of gross receipts from

the name and telephone number of

"ownership tax year" is the tax year

the appeals officer.

sales and services for the last 2

other than a calendar year (if any)

months of this 12-month period.

-6-

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

Related Articles

Related forms

Related Categories