SECTION 6. TERMS AND

CONDITIONS OF CHANGE

.01 In General . A change in annual accounting period filed under this revenue procedure must be made pursuant to the terms and conditions provided in this revenue procedure.

.02 Short Period Tax Return . The corporation must file a federal income tax return for the short period required to effect a change in annual accounting period by the due date of that return, including extensions pursuant to § 1.443– 1(a). The corporation’s taxable income for the short period must be annualized and the tax must be computed in accordance with the provisions of § 443(b) and § 1.443–1(b). However, for changes to (or from) a 52–53-week taxable year referencing the same month as the current (or requested) taxable year, see special rules in § 1.441–2.

.03 Subsequent Year Tax Returns . Returns for subsequent taxable years generally must be made on the basis of a full 12 months (or on a 52–53-week basis) ending on the last day of the requested taxable year, unless the corporation secures the approval of the Commissioner to change that taxable year.

.04 Record Keeping/Book Conformity . The books of the corporation must be closed as of the last day of the first effective year. Thereafter, the corporation must compute its income and keep its books

2002–22 I.R.B. 1035 June 3, 2002

back, but must carry it over in accordance with the provisions of §§ 172 and 1212, respectively, beginning with the first taxable year after the short period. However, the short period NOL or CL is carried back or carried over in accordance with §§ 172 or 1212, respectively, if it is either: (a) $50,000 or less, or (b) results from a short period of 9 months or longer and is less than the NOL or CL for a full 12-month period beginning with the first day of the short period.

.09 Creation of General Business Credits . If there is an unused general business credit or any other unused credit generated in the short period, the corporation must carry that unused credit forward. An unused credit from the short period may not be carried back.

.10 Concurrent Change for Related Entities . If a corporation’s interest in a pass-through entity, FSC, or IC-DISC (related entity) is disregarded pursuant to section 4.02(2)(a), 4.02(2)(b), or 4.02(3)(a) of this revenue procedure because the related entity is required to change its taxable year to the corporation’s new taxable year (or, if applicable in the case of a CFC or FPHC, to a taxable year beginning one month earlier than the corporation’s new taxable year), the related entity must change its taxable year concurrently with the corporation’s change in taxable year, either under Rev. Proc. 2002–38, Rev. Proc. 2002–39, or this revenue procedure, whichever is applicable. This related party change is required notwithstanding the testing date provisions in §§ 706(b)(4)(A)(ii), 898(c)(1)(C)(ii), § 1.921–1T(b)(6), and the special provision in § 706(b)(4)(B).