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73d C ONGRESS . SESS . II. CH. 277 . MAY 10, 1934. and the foll owin g De cemb er 31. If the change is from calendar year to fiscal year, a separate return shall be made for the period between the close of the last calendar year for which retu rn was made and the date designated as the close of the fiscal year . If the change is from one cal year to another fiscal year a separate return shall be made for the period between the close of the former fiscal year an d the date desig nated as the clo se of the new fi scal year . (b) INCOME COMPUTED ON BASIS OF SHORT PERioD .-Where a sep- arate retu rn is made under subse ction (a) on acc ount ofa change in the accounting period, and in all other cases where a separate return is required or permitted, by regulations prescribed by the Commissioner wi th the approval of the Secretary, to be made for a fractional part of a year, then the income shall be computed on the basis of the period for which separate return is made . (C) INCOME PLACED ON ANNUAL BASIS .-If a separate return is made under subsection (a) on account of a change in the accounting period, the net income, computed on the basis of the period for which separate return is made, shall be placed on an annual basis by multiplying the amount thereof by twelve and dividing by the number of months included in the period for which the separate return is made . The tax shall be such part of the tax computed on such annual basis as the number of months in such period is of twelve months. (d) EAR NED INcoME.-The Commissioner with the approval of the Secretary shall by regulations prescribe the method of applying the pr ovisi ons o f subs ectio ns (b) and (c) ( relat ing to comp uting income on the basis of a short period, and placing such income on an annual basis) to cases where the taxpayer makes a separate return under subsection (a) on account of a change in the accounting period, and it appears that for the period for which the return is so made he has received earned income . (e) REDUCTION OF CREDITS AGAINST NET INCOME .-In the case of a return made for a fractional part of a year, except a return made under subse ction (a), on a ccoun t of a chan ge in the ac coun ting period, the personal exemption and credit for dependents shall be reduce d res pecti vely t o amo unts w hich bear the same ratio to the full credits provided as the number of months in the period for which return is made bears to twelve months . Taxable year in case (f) CLOSING OF TAXABLE YEAR IN CASE OF JEOPARDY .-For closing of jeopardy, 7~
of taxable year in case of jeopardy, see section 146 . Definitions .
SEC. 48. DEF INITIONS . When used in this title, Taxable (a) TAXABLE YEAR ." Tax ab le year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the net income is computed under this Part . " Taxa ble year " includes, in the case of a return made for a fractional part of a year under the provisions of this title or under regulations pre- scribed by the Commissioner with the approval of the Secretary, the period for which such return is made . Fiscal year . (b) FISCAL YEAR.-" Fiscal year " means an acc ou nti ng period of twelve months ending on the last day of any month ot her than December . "Paid or incurred" (c) P AID, INC URRE D, ACCRUED .-The term s "paid or incurred" and paid or accrued ." and " paid or accrued " shall be construed according to the method of accounting upon the basis of which the net income is comp uted under this Part . Trade or business .
(d) T RADE OR BUSINESS . -- The t erm " trade or business " includes the performance of the functions of a public office . INCOME TAX . ACCOUNTING PERIODS AND METHOD S-Con td . Computation on ba- sis of abort period ; where separate return made . Income placed on an- nual basis. Computing earned income. R educ tion of per - sonal credits for frac- tions of a year.
