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26 U.S.C. § 443 — Returns for a period of less than 12 months
Federal law — U.S. Code and appendices · legal_authorities
**(a) Returns for short period** A return for a period of less than 12 months (referred to in this section as “short period”) shall be made under any of the following circumstances:
(1) **Change of annual accounting period** — When the taxpayer, with the approval of the Secretary, 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.
**(b) Computation of tax 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 the modified taxable income for such short period by 12, 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 this 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 modified taxable income computed on the basis
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Source location: Title 26, Chapter 1, § 443; chapter-001-normal-taxes-and-surtaxes.md
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**(a) Returns for short period** A return for a period of less than 12 months (referred to in this section as “short period”) shall be made under any of the following circumstances:
(1) **Change of annual accounting period** — When the taxpayer, with the approval of the Secretary, 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.
**(b) Computation of tax 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 the modified taxable income for such short period by 12, 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 this 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 modified taxable income computed on the basis of the short period bears to the modified taxable income for the 12-month period; or
(ii) the tax computed on the modified taxable income for the short period.
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 months after the first day of the short period. Such application, in case the return was filed without regard to this paragraph, shall be considered a claim for credit or refund with respect to the amount by which the tax is reduced under this paragraph.
(D) *Regulations* — The Secretary shall prescribe such regulations as he deems necessary for the application of this paragraph.
(3) **Modified taxable income defined** — For purposes of this subsection the term “modified taxable income” means, with respect to any period, the gross income for such period minus the deductions allowed by this chapter for such period (but, in the case of a short period, only the adjusted amount of the deductions for personal exemptions).
**(c) Adjustment in deduction for personal exemption** In the case of a taxpayer other than a corporation, if a return is made for a short period by reason of subsection (a)(1) and if the tax is not computed under subsection (b)(2), then the exemptions allowed as a deduction under section 151 (and any deduction in lieu thereof) shall be reduced to amounts which bear the same ratio to the full exemptions as the number of months in the short period bears to 12.
**(d) Adjustment in computing minimum tax and tax preferences** If a return is made for a short period by reason of subsection (a)—
(1) the alternative minimum taxable income for the short period shall be placed on an annual basis by multiplying such amount by 12 and dividing the result by the number of months in the short period, and
(2) the amount computed under paragraph (1) of section 55(a) shall bear the same relation to the tax computed on the annual basis as the number of months in the short period bears to 12.
**(e) Cross references** For inapplicability of subsection (b) in computing—
(1) Accumulated earnings tax, see section 536.
(2) Personal holding company tax, see section 546.
(3) The taxable income of a regulated investment company, see section 852(b)(2)(E).
(4) The taxable income of a real estate investment trust, see section 857(b)(2)(C).
For returns for a period of less than 12 months in the case of a debtor’s election to terminate a taxable year, see section 1398(d)(2)(E).
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Requirements applicable to real estate investment trusts** The provisions of this part (other than subsection (d) of this section and subsection (g) of section 856) shall not apply to a real estate investment trust for a taxable year unless—
(1) the deduction for dividends paid during the taxable year (as defined in section 561, but determined without regard to capital gains dividends) equals or exceeds—
(A) the sum of—
(i) 90 percent of the real estate investment trust taxable income for the taxable year (determined without regard to the deduction for dividends paid (as defined in section 561) and by excluding any net capital gain); and
(ii) 90 percent of the excess of the net income from foreclosure property over the tax imposed on such income by subsection (b)(4)(A); minus
(B) any excess noncash income (as determined under subsection (e)); and
(2) either—
(A) the provisions of this part apply to the real estate investment trust for all taxable years beginning after February 28, 1986, or
(B) as of the close of the taxable year, the real estate investment trust has no earnings and profits accumulated in any non-REIT year.
For purposes of the preceding sentence, the term “non-REIT year” means any taxable year to which the provisions of this part did not apply with respect to the entity. The Secretary may waive the requirements of paragraph (1) for any taxable year if the real estate investment trust establishes to the satisfaction of the Secretary that it was unable to meet such requirements by reason of distributions previously made to meet the requirements of section 4981.
**(b) Method of taxation of real estate investment trusts and holders of shares or certificates of beneficial interest**
(1) **Imposition of tax on real estate invest
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Gross income from sources within United States** The following items of gross income shall be treated as income from sources within the United States:
(1) **Interest** — Interest from the United States or the District of Columbia, and interest on bonds, notes, or other interest-bearing obligations of noncorporate residents or domestic corporations not including—
(A) interest—
(i) on deposits with a foreign branch of a domestic corporation or a domestic partnership if such branch is engaged in the commercial banking business, and
(ii) on amounts satisfying the requirements of subparagraph (B) of section 871(i)(3) which are paid by a foreign branch of a domestic corporation or a domestic partnership, and
(B) in the case of a foreign partnership, which is predominantly engaged in the active conduct of a trade or business outside the United States, any interest not paid by a trade or business engaged in by the partnership in the United States and not allocable to income which is effectively connected (or treated as effectively connected) with the conduct of a trade or business in the United States.
(2) **Dividends** — The amount received as dividends—
(A) from a domestic corporation, or
(B) from a foreign corporation unless less than 25 percent of the gross income from all sources of such foreign corporation for the 3-year period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the corporation has been in existence) was effectively connected (or treated as effectively connected other than income described in section 884(d)(2)) with the conduct of a trade or business within the United States; but only in an amount which bears the same ratio to such dividends as the gross in
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Married individuals filing joint returns and surviving spouses** There is hereby imposed on the taxable income of—
(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $36,90015% of taxable income. Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900. Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150. Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000. Over $250,000$75,528.50, plus 39.6% of the excess over $250,000.
**(b) Heads of households** There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $29,60015% of taxable income. Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600. Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400. Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500. Over $250,000$77,485, plus 39.6% of the excess over $250,000.
**(c) Unmarried individuals (other than surviving spouses and heads of households)** There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $22,10015% of taxable income. Over $22,100 but not over $53,50
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Allowance of credit**
(1) **In general** — In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the credit percentage of so much of the taxpayer’s earned income for the taxable year as does not exceed the earned income amount.
(2) **Limitation** — The amount of the credit allowable to a taxpayer under paragraph (1) for any taxable year shall not exceed the excess (if any) of—
(A) the credit percentage of the earned income amount, over
(B) the phaseout percentage of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds the phaseout amount.
**(b) Percentages and amounts** For purposes of subsection (a)—
(1) **Percentages** — The credit percentage and the phaseout percentage shall be determined as follows: In the case of an eligible individual with:The credit percentage is:Thephaseoutpercentageis: 1 qualifying child3415.98 2 qualifying children4021.06 3 or more qualifying children4521.06 No qualifying children7.65 7.65
(2) **Amounts**
(A) *In general* — Subject to subparagraph (B), the earned income amount and the phaseout amount shall be determined as follows: In the case of an eligible individual with:The earned income amount is:Thephaseoutamount is: 1 qualifying child$6,330$11,610 2 or more qualifying children$8,890$11,610 No qualifying children$4,220 $5,280
(B) *Joint returns* — In the case of a joint return filed by an eligible individual and such individual’s spouse, the phaseout amount determined under subparagraph (A) shall be increased by $5,000.
**(c) Definitions and special rules** For purposes of this section—
(1) **Eligible individual**
(A) *In general* — The term “e
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Federal law — U.S. Code and appendices · legal_authorities
**(a) In general** For purposes of this title, the term “real estate investment trust” means a corporation, trust, or association—
(1) which is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;
(3) which (but for the provisions of this part) would be taxable as a domestic corporation;
(4) which is neither (A) a financial institution referred to in section 582(c)(2), nor (B) an insurance company to which subchapter L applies;
(5) the beneficial ownership of which is held by 100 or more persons;
(6) subject to the provisions of subsection (k), which is not closely held (as determined under subsection (h)); and
(7) which meets the requirements of subsection (c).
**(b) Determination of status** The conditions described in paragraphs (1) to (4), inclusive, of subsection (a) must be met during the entire taxable year, and the condition described in paragraph (5) must exist during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months.
**(c) Limitations** A corporation, trust, or association shall not be considered a real estate investment trust for any taxable year unless—
(1) it files with its return for the taxable year an election to be a real estate investment trust or has made such election for a previous taxable year, and such election has not been terminated or revoked under subsection (g);
(2) at least 95 percent (90 percent for taxable years beginning before January 1, 1980) of its gross income (excluding gross income from prohibited transactions) is derived from—
(A) dividends;
(B) interest;
(C) rents from real property;
(D) gain from the sale or other
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Other rates of tax on individuals, etc.**
(1) For rates of tax on nonresident aliens, see section 871.
(2) For doubling of tax on citizens of certain foreign countries, see section 891.
(3) For rate of withholding in the case of nonresident aliens, see section 1441.
(4) For alternative minimum tax, see section 55.
**(b) Special limitations on tax**
(1) For limitation on tax in case of income of members of Armed Forces, astronauts, and victims of certain terrorist attacks on death, see section 692.
(2) For computation of tax where taxpayer restores substantial amount held under claim of right, see section 1341.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Authority for making**
(1) **In general** — If the Secretary finds that a taxpayer designs quickly to depart from the United States or to remove his property therefrom, or to conceal himself or his property therein, or to do any other act (including in the case of a corporation distributing all or a part of its assets in liquidation or otherwise) tending to prejudice or to render wholly or partially ineffectual proceedings to collect the income tax for the current or the immediately preceding taxable year unless such proceeding be brought without delay, the Secretary shall immediately make a determination of tax for the current taxable year or for the preceding taxable year, or both, as the case may be, and notwithstanding any other provision of law, such tax shall become immediately due and payable. The Secretary shall immediately assess the amount of the tax so determined (together with all interest, additional amounts, and additions to the tax provided by law) for the current taxable year or such preceding taxable year, or both, as the case may be, and shall cause notice of such determination and assessment to be given the taxpayer, together with a demand for immediate payment of such tax.
(2) **Computation of tax** — In the case of a current taxable year, the Secretary shall determine the tax for the period beginning on the first day of such current taxable year and ending on the date of the determination under paragraph (1) as though such period were a taxable year of the taxpayer, and shall take into account any prior determination made under this subsection with respect to such current taxable year.
(3) **Treatment of amounts collected** — Any amounts collected as a result of any assessments under this subsection shall, to the extent thereof, be treated
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** There is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to the excess (if any) of—
(1) the tentative minimum tax for the taxable year, over
(2) the regular tax for the taxable year plus, in the case of an applicable corporation, the tax imposed by section 59A.
**(b) Tentative minimum tax** For purposes of this part—
(1) **Noncorporate taxpayers** — In the case of a taxpayer other than a corporation—
(A) *In general* — The tentative minimum tax for the taxable year is the sum of—
(i) 26 percent of so much of the taxable excess as does not exceed $175,000, plus
(ii) 28 percent of so much of the taxable excess as exceeds $175,000.
The amount determined under the preceding sentence shall be reduced by the alternative minimum tax foreign tax credit for the taxable year.
(B) *Taxable excess* — For purposes of this subsection, the term “taxable excess” means so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount.
(C) *Married individual filing separate return* — In the case of a married individual filing a separate return, subparagraph (A) shall be applied by substituting 50 percent of the dollar amount otherwise applicable under clause (i) and clause (ii) thereof. For purposes of the preceding sentence, marital status shall be determined under section 7703.
(D) *Alternative minimum taxable income* — The term “alternative minimum taxable income” means the taxable income of the taxpayer for the taxable year—
(i) determined with the adjustments provided in section 56 and section 58, and
(ii) increased by the amount of the items of tax preference described in section 57.
If a taxpayer is subject to the regular tax, such taxpayer shal
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Exclusion from gross income**
(1) **In general** — Gross income does not include any amount which (but for this subsection) would be includible in gross income by reason of the discharge (in whole or in part) of indebtedness of the taxpayer if—
(A) the discharge occurs in a title 11 case,
(B) the discharge occurs when the taxpayer is insolvent,
(C) the indebtedness discharged is qualified farm indebtedness,
(D) in the case of a taxpayer other than a C corporation, the indebtedness discharged is qualified real property business indebtedness, or
(E) the indebtedness discharged is qualified principal residence indebtedness which is discharged—
(i) before January 1, 2026, or
(ii) subject to an arrangement that is entered into and evidenced in writing before January 1, 2026.
(2) **Coordination of exclusions**
(A) *Title 11 exclusion takes precedence* — Subparagraphs (B), (C), (D), and (E) of paragraph (1) shall not apply to a discharge which occurs in a title 11 case.
(B) *Insolvency exclusion takes precedence over qualified farm exclusion and qualified real property business exclusion* — Subparagraphs (C) and (D) of paragraph (1) shall not apply to a discharge to the extent the taxpayer is insolvent.
(C) *Principal residence exclusion takes precedence over insolvency exclusion unless elected otherwise* — Paragraph (1)(B) shall not apply to a discharge to which paragraph (1)(E) applies unless the taxpayer elects to apply paragraph (1)(B) in lieu of paragraph (1)(E).
(3) **Insolvency exclusion limited to amount of insolvency** — In the case of a discharge to which paragraph (1)(B) applies, the amount excluded under paragraph (1)(B) shall not exceed the amount by which the taxpayer is insolvent.
**(b) Reduction of tax attributes**
(
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Federal law — U.S. Code and appendices · legal_authorities
Page 1549
TITLE 26—INTERNAL REVENUE CODE
§ 443
1986—Subsec. (f)(2)(B)(iii). Pub. L. 99–514, § 104(b)(6),
struck out ‘‘and by adding the zero bracket amount,’’
after ‘‘in the short period,’’.
Subsec. (f)(3), (4). Pub. L. 99–514, § 806(d), added par. (3)
and redesignated former par. (3) as (4).
Subsec. (i). Pub. L. 99–514, § 806(c)(1), added subsec. (i).
1984—Subsec. (b)(4). Pub. L. 98–369, § 803(a), added par.
(4).
Subsec. (f)(2)(A). Pub. L. 98–369, § 474(b)(2), substituted
‘‘section 15’’ for ‘‘section 21’’ in provisions preceding cl.
(i).
Subsec. (h). Pub. L. 98–369, § 803(b), added subsec. (h).
1977—Subsec. (f)(2)(B)(iii). Pub. L. 95–30 substituted
‘‘multiplying the gross income for such short period
(minus the deductions allowed by this chapter for the
short period, but only the adjusted amount of the de-
ductions for personal exemptions as described in sec-
tion 443(c)) by 365, by dividing the result by the number
of days in the short period, and by adding the zero
bracket amount’’ for ‘‘multiplying such income by 365
and dividing the result by the number of days in the
short period’’.
1976—Subsec. (f)(3). Pub. L. 94–455 struck out ‘‘or his
delegate’’ after ‘‘Secretary’’.
1964—Subsec.
(f)(2)(A).
Pub.
L.
88–272
inserted
‘‘, including,’’ before ‘‘or ending with reference to’’.
Statutory Notes and Related Subsidiaries
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100–647 effective, except as
otherwise provided, as if included in the provision of
the Tax Reform Act of 1986, Pub. L. 99–514, to which
such amendment relates, see section 1019(a) of Pub. L.
100–647, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 104(b)(6) of Pub. L. 99–514 ap-
plicable to taxable years beginnin
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