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    3 Replies Latest reply on Nov 19, 2007 7:41 PM by Lighthouse24

    Changing a C Corporation tax year

    akgold Adventurer
      My C Corporatin, AKGold Internet, Inc. used to be on a year ending April 30. This had to do with the time the corporation was created. Recently the Board decided to change the tax year to the regular year ending December 31. When my accountant filed my corporate taxes, he sent in the form for changing the tax year. The goverment sent back the form saying that AKGold Internet just needed to file the taxes for Dec. 31 for this upcoming year and that would be sufficient.

      We called the IRS to confirm this and they said this is the case. It just seems a little weird to me that the governent would have a form that they request that you complete and when you complete it, they send it back to you stating that it was not necessary to complete.

      Needless to say, I am keeping their document in the tax files of my corporation in case there is a problem in the future. Does this sound right to anyone? Have any accountants encountered this before?

      Here's the info from the IRS's letter to my corporation:

      "Dear Taxpayer:

      Thank you for your Form 1128.

      We are returning your Form 1128, Application to Adopt, Change, or Retain a Tax Year, because you are not required to file Form 1128. The filing of your initial Form 1120, U.S. Corporation Income Tax Return will establish your tax year end of Dec. 31.


      Thanks for any help or advice in advance!
        • Re: Changing a C Corporation tax year
          LUCKIEST Guide
          Very interesting. Look closely at the wording "The filing of your initial Form 1120"
          As you wrote, the Corp year end used to be April 30.
          Maybe the I R S did not understand when you filed form 1128.
          They responded with the words "The filing of your initial Form 1120"
          Knowing the I R S, there will be correspondence and a problems in the future.
          Happy Thanksgiving, LUCKIEST
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          • Re: Changing a C Corporation tax year
            Lighthouse24 Ranger

            Hmmm -- perhaps nobody ever tried to do that before (I'm only half joking). For a small business owner, having a corporate tax year end four months after the personal tax year is normally a huge advantage. It allows us to legally shift income back and forth to smooth out the effective tax rate, and to perpetually have a chunk of income that is never really subject to income tax. Consequently, the IRS probably doesn't get a lot of requests to do what you're doing, since it closes a "loophole" of sorts and would usually result in the them collecting more tax revenue. Nevertheless, their reply was interesting!
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