Page:United States Statutes at Large Volume 96 Part 2.djvu/323

 PUBLIC LAW 97-354—OCT. 19, 1982

96 STAT. 1685

"PART IV—DEFINITIONS; MISCELLANEOUS "Sec. 1377. Definitions and special rule. "Sec. 1378. Taxable year of S corporation. "Sec. 1379. Transitional rules on enactment. "SEC. 1377, DEFINITIONS AND SPECIAL RULE.

26 USC 1377.

"(a) PRO RATA SHARE.—For purposes of this subchapter— "(1) IN GENERAL.—Except as provided in paragraph (2), each shareholder's pro rata share of any item for any taxable year shall be the sum of the amounts determined with respect to the shareholder— "(A) by assigning an equal portion of such item to each day of the taxable year, and (B) then by dividing that portion pro rata among the shares outstanding on such day. "(2) ELECTION TO TERMINATE YEAR.—Under regulations prescribed by the Secretary, if any shareholder terminates his interest in the corporation during the taxable year and all persons who are shareholders during the taxable year agree to the application of this paragraph, paragraph (1) shall be applied as if the taxable year consisted of 2 taxable years the first of which ends on the date of the termination. "(b) POST-TERMINATION TRANSITION PERIOD.—

"(1) IN GENERAL.—For purposes of this subchapter, the term 'post-termination transition period' means— "(A) the period beginning on the day after the last day of the corporation's last taxable year as an S corporation and ending on the later of— "(i) the day which is 1 year after such last day, or "(ii) the due date for filing the return for such last year as an S corporation (including extensions), and "(B) the 120-day period beginning on the date of a determination that the corporation's election under section 1362(a) had terminated for a previous taxable year. "(2) DETERMINATION DEFINED.—For purposes of paragraph (1), the term 'determination' means— "(A) a court decision which becomes final, "(B) a closing agreement, or "(C) an agreement between the corporation and the Secretary that the corporation failed to qualify as an S corporation. "(c) MANNER OF MAKING ELECTIONS, ETC.—Any election under this subchapter, and any revocation under section 1362(d)(l), shall be made in such manner as the Secretary shall by regulations prescribe. "SEC. 1378. TAXABLE YEAR OF S CORPORATION. "(a) GENERAL RULE.—For purposes of this subtitle—

"(1) an S corporation shall not change its taxable year to any accounting period other than a permitted year, and "(2) no corporation may make an election under section 1362(a) for any taxable year unless such taxable year is 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

^"^^' P '^^'^^• 26 USC 1378.

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