Page:United States Statutes at Large Volume 53 Part 1.djvu/38

 26 CODIFICATION OF INTERNAL REVENUE LAWS SEC. 46. CHANGE OF ACCOUNTING PERIOD. If a taxpayer changes his accounting period from fiscal year to cal- endar year, from calendar year to fiscal year, or from one fiscal year to another, the net income shall, with the approval of the Commis- sioner, be computed on the basis of such new accounting period, subject to the provisions of section 47. SEC. 47. RETURNS FOR A PERIOD OF LESS THAN TWELVE MONTHS. (a) RETURNS FOR SHORT PERIOD RESULTING FROM CHANGE OF ACCOUNTING PERIOD.- I f a taxpayer, with the approval of the Com- missioner, changes the basis of computing net income from fiscal year to calendar year a separate return shall be made for the period between the close of the last fiscal year for which return was made and the following December 31. If the change is from calendar year to fiscal year, a separate return shall be made for the period between the close of the last calendar year for which return was made and the date designated as the close of the fiscal year. If the change is from one fiscal year to another fiscal year a separate return shall be made for the period between the close of the former fiscal year and the date designated as the close of the new fiscal year. (b) INCOME COMPUTED ON BASIS OF SHORT PERIoD.-W here a sep- arate return is made under subsection (a) on account of a change m the accounting period, and in all other cases where a separate return is required or permitted, by regulations prescribed by the Commis- sioner with the approval of the Secretary, to be made for a fractional part of a year, then the income shall be computed on the basis of the period for which separate return is made. (c) INCOME PLACED ON ANNUAL BASIS. - If a separate return is made (except returns of the income of a corporation) under subsec- tion (a) on account of a change in the accounting period, the net income, computed on the basis of the period for which separate return is made, shall be placed on an annual basis by multiplying the amount thereof by twelve and dividing by the number of months included in the period for which the separate return is made. The tax shall be such part of the tax computed on such annual basis as the number of months in such period is of twelve months. (d) EARNED INCOME. - -'The Commissioner with tlhe approval of the Secretary shall by regulations prescribe the method of applying the provisions of subsections (b) and (c) (relating to computing income on the basis of a short period, and placing such income on an annual basis) to cases where the taxpayer makes a separate return under sub- section (a) on account of a change in the accounting period, and it appears that for the period for which the return is so made he has received earned income. (e) REDUCTION OF CREDITS AGAINST NET INCOME.- In the case of a return made for a fractional part of a year, except a return made under subsection (a), on account of a change in the accounting period, the personal exemption and credit for dependents shall be reduced respectively to amounts which bear the same ratio to the full credits provided as the number of months in the period for which return is made bears to twelve months. (f) CLOSING OF TAXABLE YEAR IN CASE OF JEOPARDY. - For closing of taxable year in case of jeopardy, see section 146. SEC. 48. DEFINITIONS. When used in this chapter- (a) TAXABLE YEAR.- "Taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the net income is computed under this Part. "Taxable year" includes, in the case of a return made for a fractional part of a year under the provisions of this chapter or under regulations pre- scribed by the Commissioner with the approval of the Secretary, the period for which such return is made.

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