S corp, fiscal year

[tax1111]

For s corp's fiscal year option, does the following understanding correct?

1. usually s corp needs to be of calender year

2. it can make sec 444 election but can only choose 9/30-11/30 as year end

3. it can make simplied election with auto approval and need to show business purpose (25%+ income). But under this simplified election, they can choose any month as fiscal year end?

4. what is considered a good business purpose?

 

Thank you!

[Lee B]

Good Discussion in The Tax Advisor:   https://www.thetaxadviser.com/issues/2009/apr/scorporationtaxyearrules.html

[tax1111]

Thanks.  So, s corp can elect any fiscal year end? 

[Lee B]

1 hour ago, tax1111 said:

Thanks.  So, s corp can elect any fiscal year end? 

No

 

[tax1111]

Thanks. For a new business to make s election, the 25% test option is not available right? which means they can only elect calendar year, or 9/30-11/30 fiscal year end?

[DANRVAN]

On 4/13/2023 at 5:25 PM, tax1111 said:

For a new business to make s election, the 25% test option is not available right?

 

Yes, since they do not have a base period to meet the 25% test.

On 4/13/2023 at 5:25 PM, tax1111 said:

means they can only elect calendar year, or 9/30-11/30 fiscal year end?

Yes, Sept, Oct, or Nov year end.

 

Is there a reason for choosing another year end date?