When preparing a statement of income and expenses (generally your
farm income tax return), you must use your books and records for a
specific interval of time called an accounting period. The annual
accounting period for your tax return is called a tax year.
You can generally use one of the following tax years.
- A calendar tax year.
- A fiscal tax year.
However, special restrictions apply to partnerships, S
corporations, and personal service corporations. See Publication 538.
You adopt a tax year when you file your first income tax return.
You must adopt your first tax year by the due date (not including
extensions) for filing a return for that year.
Calendar tax year.
A calendar tax year is 12 consecutive months beginning January 1
and ending December 31.
You must adopt the calendar tax year if any of the following apply.
- You do not keep adequate records.
- You have no annual accounting period.
- Your present tax year does not qualify as a fiscal
year.
If you filed your first income tax return using the calendar tax
year and you later begin business as a farmer, you must continue to
use the calendar tax year unless you get IRS approval to change it.
See Change in tax year, later.
If you adopt the calendar tax year, you must maintain your books
and records and report your income and expenses for the period from
January 1 through December 31 of each year.
Fiscal tax year.
A fiscal tax year is 12 consecutive months ending on the last day
of any month except December. A 52-53 week tax year is a fiscal
tax year that varies from 52 to 53 weeks.
If you adopt a fiscal tax year, you must maintain your books and
records and report your income and expenses using the same tax year.
For more information on a fiscal tax year, including a 52-53
week tax year, see Publication 538.
Change in tax year.
Once you have chosen your tax year, you must, with certain
exceptions, get IRS approval to change it. To get approval, you must
file Form 1128.
You may have to pay a fee. For more
information, see the form instructions.
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