SECTION 2. BACKGROUND

.01 Taxable Year Defined .

(1) In general . Section 441(b) and § 1.441–1(b)(1) provide that the term “taxable year” generally means the tax

.02 Change in Taxable Year .

(1) In general. Section 1.442– 1(a)(1) generally provides that a taxpayer that wants to change its annual accounting period and use a new taxable year must obtain the approval of the Commissioner.

(2) Annualization of short period return . Section 443(b) and § 1.443– 1(b)(1)(i) generally provide that if a return is made for a short period resulting from a change of an annual accounting period, the taxable income for the short period must be placed on an annual basis by multiplying the income by 12 and dividing the result by the number of months in the short period. Unless § 443(b)(2) and § 1.443–1(b)(2) apply, the tax for the short period generally is the same part of the tax computed on an annual basis as the number of months in the short period is of 12 months. But see, for example, §§ 1.852–3(e), 1.857– 2(a)(4), and 1.1502–76 for exceptions to this general rule for a regulated investment company (RIC), a real estate investment trust (REIT), and a subsidiary corporation ceasing to be a member of a consolidated group, respectively.

(3) No retroactive change in annual accounting period . Unless specifically authorized by the Commissioner, a taxpayer may not request, or otherwise make, a retroactive change in annual accounting period, regardless of whether the change is to a required taxable year.

.03 Approval of a Change . Section 1.442–1(b) provides, in part, that in order to secure the approval of the Commissioner to change an annual accounting

taxable year .03 Nonautomatic Changes .04 Examples