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26 U.S.C. § 444 — Election of taxable year other than required taxable year
Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** Except as otherwise provided in this section, a partnership, S corporation, or personal service corporation may elect to have a taxable year other than the required taxable year.
**(b) Limitations on taxable years which may be elected**
(1) **In general** — Except as provided in paragraphs (2) and (3), an election may be made under subsection (a) only if the deferral period of the taxable year elected is not longer than 3 months.
(2) **Changes in taxable year** — Except as provided in paragraph (3), in the case of an entity changing a taxable year, an election may be made under subsection (a) only if the deferral period of the taxable year elected is not longer than the shorter of—
(A) 3 months, or
(B) the deferral period of the taxable year which is being changed.
(3) **Special rule for entities retaining 1986 taxable years** — In the case of an entity’s 1st taxable year beginning after December 31, 1986, an entity may elect a taxable year under subsection (a) which is the same as the entity’s last taxable year beginning in 1986.
(4) **Deferral period** — For purposes of this subsection, except as provided in regulations, the term “deferral period” means, with respect to any taxable year of the entity, the months between—
(A) the beginning of such year, and
(B) the close of the 1st required taxable year ending within such year.
**(c) Effect of election** If an entity makes an election under subsection (a), then—
(1) in the case of a partnership or S corporation, such entity shall make the payments required by section 7519, and
(2) in the case of a personal service corporation, such corporation shall be subject to the deduction limitations of section 280H.
**(d) Elections**
(1) **Person making election** — An election under sub
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Source file: Laws/federal/codes/united-states-code/title-26/section-444-election-of-taxable-year-other-than-required-taxable-year--589ee0fb42.md
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Source location: Title 26, Chapter 1, § 444; chapter-001-normal-taxes-and-surtaxes.md
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**(a) General rule** Except as otherwise provided in this section, a partnership, S corporation, or personal service corporation may elect to have a taxable year other than the required taxable year.
**(b) Limitations on taxable years which may be elected**
(1) **In general** — Except as provided in paragraphs (2) and (3), an election may be made under subsection (a) only if the deferral period of the taxable year elected is not longer than 3 months.
(2) **Changes in taxable year** — Except as provided in paragraph (3), in the case of an entity changing a taxable year, an election may be made under subsection (a) only if the deferral period of the taxable year elected is not longer than the shorter of—
(A) 3 months, or
(B) the deferral period of the taxable year which is being changed.
(3) **Special rule for entities retaining 1986 taxable years** — In the case of an entity’s 1st taxable year beginning after December 31, 1986, an entity may elect a taxable year under subsection (a) which is the same as the entity’s last taxable year beginning in 1986.
(4) **Deferral period** — For purposes of this subsection, except as provided in regulations, the term “deferral period” means, with respect to any taxable year of the entity, the months between—
(A) the beginning of such year, and
(B) the close of the 1st required taxable year ending within such year.
**(c) Effect of election** If an entity makes an election under subsection (a), then—
(1) in the case of a partnership or S corporation, such entity shall make the payments required by section 7519, and
(2) in the case of a personal service corporation, such corporation shall be subject to the deduction limitations of section 280H.
**(d) Elections**
(1) **Person making election** — An election under subsection (a) shall be made by the partnership, S corporation, or personal service corporation.
(2) **Period of election**
(A) *In general* — Any election under subsection (a) shall remain in effect until the partnership, S corporation, or personal service corporation changes its taxable year or otherwise terminates such election. Any change to a required taxable year may be made without the consent of the Secretary.
(B) *No further election* — If an election is terminated under subparagraph (A) or paragraph (3)(A), the partnership, S corporation, or personal service corporation may not make another election under subsection (a).
(3) **Tiered structures, etc.**
(A) *In general* — Except as otherwise provided in this paragraph—
(i) no election may be under subsection (a) with respect to any entity which is part of a tiered structure, and
(ii) an election under subsection (a) with respect to any entity shall be terminated if such entity becomes part of a tiered structure.
(B) *Exceptions for structures consisting of certain entities with same taxable year* — Subparagraph (A) shall not apply to any tiered structure which consists only of partnerships or S corporations (or both) all of which have the same taxable year.
**(e) Required taxable year** For purposes of this section, the term “required taxable year” means the taxable year determined under section 706(b), 1378, or 441(i) without taking into account any taxable year which is allowable by reason of business purposes. Solely for purposes of the preceding sentence, sections 706(b), 1378, and 441(i) shall be treated as in effect for taxable years beginning before January 1, 1987.
**(f) Personal service corporation** For purposes of this section, the term “personal service corporation” has the meaning given to such term by section 441(i)(2).
**(g) Regulations** The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this section, including regulations to prevent the avoidance of subsection (b)(2)(B) or (d)(2)(B) through the change in form of an entity.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** This section applies to a partnership or S corporation for any taxable year, if—
(1) an election under section 444 is in effect for the taxable year, and
(2) the required payment determined under subsection (b) for such taxable year (or any preceding taxable year) exceeds $500.
**(b) Required payment** For purposes of this section, the term “required payment” means, with respect to any applicable election year of a partnership or S corporation, an amount equal to—
(1) the excess of the product of—
(A) the applicable percentage of the adjusted highest section 1 rate, multiplied by
(B) the net base year income of the entity, over
(2) the net required payment balance.
For purposes of paragraph (1)(A), the term “adjusted highest section 1 rate” means the highest rate of tax in effect under section 1 as of the end of the base year plus 1 percentage point (or, in the case of applicable election years beginning in 1987, 36 percent).
**(c) Refund of payments**
(1) **In general** — If, for any applicable election year, the amount determined under subsection (b)(2) exceeds the amount determined under subsection (b)(1), the entity shall be entitled to a refund of such excess for such year.
(2) **Termination of elections, etc.** — If—
(A) an election under section 444 is terminated effective with respect to any year, or
(B) the entity is liquidated during any year, the entity shall be entitled to a refund of the net required payment balance.
(3) **Date on which refund payable** — Any refund under this subsection shall be payable on the later of—
(A) April 15 of the calendar year following—
(i) in the case of the year referred to in paragraph (1), the calendar year in which it begins,
(ii) in the case of the year referred to in
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 7519
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Adjustments applicable to all taxpayers** In determining the amount of the alternative minimum taxable income for any taxable year the following treatment shall apply (in lieu of the treatment applicable for purposes of computing the regular tax):
(1) **Depreciation**
(A) *In general*
(i) *Property other than certain personal property* — Except as provided in clause (ii), the depreciation deduction allowable under section 167 with respect to any tangible property placed in service after December 31, 1986, shall be determined under the alternative system of section 168(g). In the case of property placed in service after December 31, 1998, the preceding sentence shall not apply but clause (ii) shall continue to apply.
(ii) *150-percent declining balance method for certain property* — The method of depreciation used shall be—
(I) the 150 percent declining balance method,
(II) switching to the straight line method for the 1st taxable year for which using the straight line method with respect to the adjusted basis as of the beginning of the year will yield a higher allowance.
The preceding sentence shall not apply to any section 1250 property (as defined in section 1250(c)) (and the straight line method shall be used for such section 1250 property) or to any other property if the depreciation deduction determined under section 168 with respect to such other property for purposes of the regular tax is determined by using the straight line method.
(B) *Exception for certain property* — This paragraph shall not apply to property described in paragraph (1), (2), (3), or (4) of section 168(f), or in section 168(e)(3)(C)(iv).
(C) *Coordination with transitional rules*
(i) *In general* — This paragraph shall not apply to property pla
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** If—
(1) an election by a personal service corporation under section 444 is in effect for a taxable year, and
(2) such corporation does not meet the minimum distribution requirements of subsection (c) for such taxable year,
then the deduction otherwise allowed under this chapter for applicable amounts paid or incurred by such corporation to employee-owners shall not exceed the maximum deductible amount. The preceding sentence shall not apply for purposes of subchapter G (relating to personal holding companies).
**(b) Carryover of nondeductible amounts** If any amount is not allowed as a deduction for a taxable year under subsection (a), such amount shall be treated as paid or incurred in the succeeding taxable year.
**(c) Minimum distribution requirement** For purposes of this section—
(1) **In general** — A personal service corporation meets the minimum distribution requirements of this subsection if the applicable amounts paid or incurred during the deferral period of the taxable year (determined without regard to subsection (b)) equal or exceed the lesser of—
(A) the product of—
(i) the applicable amounts paid during the preceding taxable year, divided by the number of months in such taxable year, multiplied by
(ii) the number of months in the deferral period of the preceding taxable year, or
(B) the applicable percentage of the adjusted taxable income for the deferral period of the taxable year.
(2) **Applicable percentage** — The term “applicable percentage” means the percentage (not in excess of 95 percent) determined by dividing—
(A) the applicable amounts paid or incurred during the 3 taxable years immediately preceding the taxable year, by
(B) the adjusted taxable income of such corporation for such 3 taxable year
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Federal law — U.S. Code and appendices · legal_authorities
Page 1551
TITLE 26—INTERNAL REVENUE CODE
§ 444
12 months in the case of a debtor’s election to termi-
nate a taxable year.
1978—Subsec. (b)(1). Pub. L. 95–600, § 703(o)(2), sub-
stituted ‘‘modified taxable income for such short pe-
riod’’ for ‘‘gross income for such short period (minus
the deductions allowed by this chapter for the short pe-
riod, but only the adjusted amount of the deductions
for personal exemptions)’’.
Subsec. (b)(2). Pub. L. 95–600, § 703(o)(1), substituted in
cl. (i) ‘‘modified taxable income’’ for ‘‘taxable income’’
in two places and in cl. (ii) ‘‘the sum of the modified
taxable income’’ for ‘‘the taxable income’’ and ‘‘plus
the zero bracket amount’’ for ‘‘without placing the tax-
able income on an annual basis’’.
Subsec. (b)(3). Pub. L. 95–600, § 703(o)(3), added par. (3).
Subsec. (d). Pub. L. 95–600, § 421(e)(2), substituted ‘‘Ad-
justment in computing minimum tax for tax pref-
erences’’ for ‘‘Adjustment in exclusion for computing
minimum tax for tax preferences’’ in heading, redesig-
nated existing provisions as par. (2) and as so redesig-
nated applied par. (2) to corporations, and added par.
(1).
1977—Subsec. (b)(1). Pub. L. 95–30 substituted ‘‘multi-
plying the gross income for such short period (minus
the deductions allowed by this chapter for the short pe-
riod, but only the adjusted amount of the deductions
for personal exemptions) by 12, dividing the result by
the number of months in the short period, and adding
the zero bracket amount’’ for ‘‘multiplying such in-
come by 12, and dividing the result by the number of
months in the short period’’.
1976—Subsec. (a)(1). Pub. L. 94–455, § 1906(b)(13)(A),
struck out ‘‘or his delegate’’ after ‘‘Secretary’’.
Subsec. (a)(3). Pub. L. 94–455, § 1204(c)(2), struck out
par. (3) w
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 444
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