Page:United States Statutes at Large Volume 68A.djvu/190

 150

INTERNAL REVENUE CODE OF 1954

(1) CHANGE OF ANNUAL ACCOUNTING PERIOD.—When the taxpayer, with the approval of the Secretary or his delegate, changes his annual accounting period. In such a case, the return shall be made for the short period beginning on the day after the close of the former taxable year and ending at the close of the day before the day designated as the first day of the new taxable year. (2) TAXPAYER NOT IN EXISTENCE FOR ENTIRE TAXABLE YEAR.—

When the taxpayer is in existence during only part of what would otherwise be his taxable year. (3) TERMINATION OF TAXABLE YEAR FOR JEOPARDY.—When

the

Secretary or his delegate terminates the taxpayer's taxable year under section 6851 (relating to tax in jeopardy). (b) COMPUTATION OF T A X ON CHANGE OF ANNUAL ACCOUNTING PERIOD.— (1) GENERAL RULE.—If a return is made under paragraph (1)

of subsection (a), the taxable income for the short period shall be placed on an annual basis by multiplying such income by 12 and dividing the result by the number of months in the short period. The tax shall be the same part of the tax computed on the annual basis as the number of months in the short period is of 12 months. (2) EXCEPTION. — (A) COMPUTATION BASED ON 12-MONTH PERIOD.—If

the taxpayer applies for the benefits of this paragraph and establishes the amount of his taxable income for the 12-month period described in subparagraph (B), computed as if that period were a taxable year and under the law applicable to that year, then the tax for the short period, computed under paragraph (1), shall be reduced to the greater of the following: (i) an amount which bears the same ratio to the tax computed on the taxable income for the 12-month period as the taxable income computed on the basis of the short period bears to the taxable income for the 12-month period; or (ii) the tax computed on the taxable income for the short period without placing the taxable income on an annual basis. The taxpayer (other than a taxpayer to whom subparagraph (B) (ii) applies) shall compute the tax and file his return without the application of this paragraph. (B) 12-MONTH PERIOD.—The 12-month period referred to in subparagraph (A) shall be— (i) the period of 12 months beginning on the first day of the short period, or (ii) the period of 12 months ending at the close of the last day of the short period, if at the end of the 12 months referred to in clause (i) the taxpayer is not in existence or (if a corporation) has theretofore disposed of substantially all of its assets. (C) APPLICATION FOR BENEFITS.—Application for the benefits

of this paragraph shall be made in such manner and at such time as the regulations prescribed under subparagraph (D) may require; except that the time so prescribed shall not be later than the time (including extensions) for filing the return for the first taxable year which ends on or after the day which is 12 § 443(a)(1)

�