SECTION 6. TERMS AND CONDITIONS OF CHANGE

.01 In General .02 Short Period Tax Return .03 Subsequent Year Tax Returns .04 Record Keeping/Book Conformity .05 Changes in Natural Business Year .06 Changes in Ownership Taxable Year

.07 52–53–week Taxable Years .08 Creation of Net Operating Loss or Capital Loss

2002–22 I.R.B. 1031 June 3, 2002

subject to the provisions of section 4.02 of this revenue procedure. However, notwithstanding sections 4.02(1), (2), (3), (6), (8), and (11) of this revenue procedure, this revenue procedure applies to a corporation (including a member of a consolidated group) that wants to change from a 52–53-week taxable year that references a particular month to a non–52– 53-week taxable year that ends on the last day of that month, and vice versa.

(3) Natural business year . Notwithstanding sections 4.02(2) and (3) of this revenue procedure, this revenue procedure applies to a corporation that wants to change to a natural business year that satisfies the 25-percent gross receipts test described in section 5.

(4) Section 898 election . Notwithstanding section 4.02 of this revenue procedure, this revenue procedure applies to a CFC (as defined in § 957) that wants to revoke its one-month deferral election under § 898(c)(1)(B) and change its taxable year to the majority U.S. shareholder year (as defined in § 898(c)(1)(C)).

.02 Inapplicability . This revenue procedure does not apply to the following corporations:

(1) Prior change . A corporation that has changed its annual accounting period at any time within the most recent 48–month period ending with the last month of the requested taxable year. For this purpose, the following changes will not be considered a change in annual accounting period:

(a) a prior change in accounting period by a corporation in order to comply with the common taxable year requirement of either § 1.1502– 75(d)(3)(v) or 1.1502–76(a)(1). See § 1. 442–1(d); (b) a prior change in accounting period by a corporation either acquired within the last 12 months, or whose majority shareholder changed its taxable year within the last 12 months, if that corporation currently wants to change to the taxable year of its majority shareholder with which it does not file consolidated tax returns in order to file consolidated financial statements. For purposes of this section 4.02(1)(b), “majority shareholder” means ownership that satisfies the test of § 1504(a)(2), substituting “more than 50 percent” for “at least 80 percent;”

period, a taxpayer must file an application, generally on Form 1128, Application to Adopt, Change, or Retain a Tax Year, with the Commissioner within such time and in such manner as is provided in administrative procedures published by the Commissioner. In general, a change in annual accounting period will be approved where the taxpayer establishes a business purpose for the requested annual accounting period and agrees to the Commissioner’s prescribed terms, conditions, and adjustments for effecting the change.