s corp short year

[WITAXLADY]

So client formed a new s corp and is making a good amount of money. Wants to end year Sept 30thbso his 2013. So his personal year in one is less. Is this llegal. Possible? Please advise? Thx asap

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[jklcpa]

Yes, it is possible for an S corp to have a fiscal year. It's a sec 444 election, and requires filing form 8716. It also requires that the S corp pays the tax on the deferral period each year via form 8752.

Years ago I had an existing S corp that wanted to keep its June 30 fiscal year end for no other reason than that's how it had always reported. I didn't see any advantage since the corp is basically paying tax on the deferral period that is like a deposit held by the IRS.

http://www.irs.gov/pub/irs-pdf/f8716.pdf

http://www.irs.gov/pub/irs-pdf/f8752.pdf

[WITAXLADY]

Thank you.

However, can he switch to the calendar year after this?

[jklcpa]

Yes, the calendar year is a permitted year. I believe the procedure is found in the instructions to Form 1128.

[Guest Taxed]

Do any of you charge little extra for fiscal year returns?

I do because i have to spend extra time reconciling their books.

[kcjenkins]

Of course. Always extra work involving payroll, if nothing else.