Introduction Of The Tax Accounting Period

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Introduction To: JIM Chief Financial Officer From: Yolanda Bell Tax Analyst It has been brought to my attention that you would like to change the tax accounting period from April 1st to march 31st, and there are a few things you must be aware of before you decide how to change the accounting period, what accountant methods to use in this change, and how to report net operating loss associated with the change. First of all, you must decide what tax year that will be used. The tax year is an annual accounting period in which records are kept on the following, income is reported, as well as company expenses; short tax years may not be used. A short tax year is a tax year with less than 12 months. But, because the change you want to make is not less than 12 months it will not apply to you. A calendar year or fiscal year which is 52-53 weeks can be used as tax years to determine an accounting period (IRS, 2016). If you do not have a required tax year, you must file the first income tax return for that year. According to the IRS, “a required tax return cannot be adopted if: • Filing for an application extension • Filling an application for employer identification number (Form SS-4) • Paying estimated taxes (IRS, 2016) Therefore, because you have choosing to change to April 1st to March 31st year election will be changing to 52-53 week tax year. But, you must keep accurate books and records of tax income and expense account on a weekly basis. The requirements for the 52–53
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