Changing Fiscal Year

[Randall]

Anyone ever do this?  S Corp client (currently on calendar year) wants to change to a fiscal year.  Only one shareholder.  I understand we use Form 1128.  There is an automatic approval request and a IRS ruling request.  Can he get an automatic approval?  or does he need a business reason?  Also, I understand he will not be able to change his personal reporting tax year.

[Lee B]

I did it years ago. Assuming the same rules apply, the approval is not automatic and you need a legitimate business reason.

My client was required to post and maintain a deposit of of potentially deferred taxes.

[Randall]

30 minutes ago, Lee B said:

I did it years ago. Assuming the same rules apply, the approval is not automatic and you need a legitimate business reason.

My client was required to post and maintain a deposit of of potentially deferred taxes.

Did the deposit cover the future tax in the later 'full' year?  And was the client credited with that payment when the following full year was reported?

[Lee B]

In my client's case the deposit had to be maintained because  by changing to a fiscal year you are deferring taxes until the future.

It was not applied to the following year.

[Randall]

18 hours ago, Lee B said:

In my client's case the deposit had to be maintained because  by changing to a fiscal year you are deferring taxes until the future.

It was not applied to the following year.

But if it was a deposit, wasn't it returned, or applied to a future year tax?  Or was this the fee required?  And what was the amount and how determined?

[Lee B]

1 hour ago, Randall said:

But if it was a deposit, wasn't it returned, or applied to a future year tax?  Or was this the fee required?  And what was the amount and how determined?

I apologize, it appears that some of the rules may have changed, since I helped my client.

You should read the instructions for Form 1128 :   https://www.irs.gov/pub/irs-pdf/i1128.pdf

 

[Randall]

22 hours ago, Lee B said:

I apologize, it appears that some of the rules may have changed, since I helped my client.

You should read the instructions for Form 1128 :   https://www.irs.gov/pub/irs-pdf/i1128.pdf

 

Thanks for the comments.  I was looking at the instructions for 1128.  I saw there was no fee for the automatic approval.  But I think my client will not be eligible and will have to request a ruling approval.  There was mention of a fee but I couldn't find the fee amount and there was mention of the fee varying.

[jklcpa]

49 minutes ago, Randall said:

Thanks for the comments.  I was looking at the instructions for 1128.  I saw there was no fee for the automatic approval.  But I think my client will not be eligible and will have to request a ruling approval.  There was mention of a fee but I couldn't find the fee amount and there was mention of the fee varying.

If you are filing form 1128 for an existing S corp, the instructions to that form says that if you are changing the accounting and tax reporting year to a fiscal year under sec 442 and reg sec 1.442-1(b), then you are to follow Rev Proc 2006-46, and section 7.02 item (5) of that Rev Proc says this:
 

Quote

(5) No user fee. A user fee is not required for applications filed under this revenue procedure and, except as provided in section 9.01 of this revenue procedure, the receipt of an application filed under this revenue procedure may not be acknowledged.