CHAPTER 1— NORMAL TAXES AND SURTAXES›Subchapter S— Tax Treatment of S Corporations and Their Shareholders›PART IV— DEFINITIONS; MISCELLANEOUS
§ 1378. Taxable year of S corporation
26 U.S.C. Subtitle A — Income Taxes (Internal Revenue Code) · 2026 edition · updated 2026-10-03 · United States
(a) General rule
For purposes of this subtitle, the taxable year of an S corporation shall be a permitted year.
(b) Permitted year defined
For purposes of this section, the term “permitted year” means a taxable year which—
(1) is a year ending December 31, or
(2) is any other accounting period for which the corporation establishes a business purpose to the satisfaction of the Secretary.
For purposes of paragraph (2), any deferral of income to shareholders shall not be treated as a business purpose.
(Added Pub. L. 97–354, § 2, Oct. 19, 1982, 96 Stat. 1685; amended Pub. L. 98–369, div. A, title VII, § 721(m), (q), July 18, 1984, 98 Stat. 969, 970; Pub. L. 99–514, title VIII, § 806(b), Oct. 22, 1986, 100 Stat. 2363.)
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