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74TH C ONGRESS . SESS . II. CH. 690. JU NE 22, 1936 . autho rized to distribu te, appo rtion, o r alloca te gross income o r deduc- tions between or among such organizations, trades, or businesses, if he determines that such distribution, apportionment, or allocation is ne cessary i n order to preve nt evasi on of ta xes or c learly to reflect the income of any of such organizations, trades, or businesses . Change of account- SEC. 46. CHANGE OF ACCOUNTING PERIOD. ing period . Net income com- If a taxpayer changes his accounting period from fiscal year to puted on basis of new nod .
calendar year, from calendar year to fiscal year, or from one fiscal pe year to another, the net income shall, with the approval of the Commiss ioner, be computed on the basis of such n ew accounti ng perio d, subjec t to the provisi ons of s ection 4 7 . Returns for less than SEC . 47. RET URNS FOR A PE RIOD OF LE SS THA N TWELVE MONTHS . a year . Ba sis of computing (a) RET UR NS FOR SHORT PERIOD RESULTING FR OM CHANGE OF pe- r iod when 5 P ACCOUNTING PERIOD.-If a taxpayer, with the approval of the Com- missioner, changes the basis of computing net income from fiscal year to calendar year a separate return shall be made for the period between the close of the last fiscal year for which return was made and the following December 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 return was made and the date designated as the close of the fiscal year . If the change is from one fiscal year to another fiscal year a separate return shall be made for the period between the close of the former fiscal year and the date designated as the close of the new fiscal year . Income computed on (b) INCOME COMPUTED ON BASIS OF SHORT PERIOD.-Where a bas is of short perio d whe re separate retur n separate return is made under subsection (a) on account of a change m ade . in the accounting period, and in all other cases where a separate return is required or permitted, by regulations prescribed by the Commissioner with 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 . Income placed on an- (C) INCOME PLACED ON ANNUAL BASIS.-If a separate return is nual basis. made (except returns of the income of a corporation) under sub- section (a) on account of a change in the accounting period, the net income, c omputed o n the bas is of the period fo r which s eparate 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 . Computation of (d) EARNED INCOME .-The Commissioner with the approval of ear ned income . the Secretary shall by regulations prescribe the method of applying the provisions of subsections (b) and (c) (relating to computing income on the basis of a short period, and placing such income on an annu al basis) to cases wh ere the ta xpayer mak es a separa te 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 . Reduction of per- (e) REDUCTION OF CREDITS AGAINST NET INCOME .-In the case of so nal credi ts for fra c- tions of a year . a return made for a fractional part of a year, except a return made under subsection (a), on account o f a change in the acc ounting period, the personal exemption and credit for dependents shall be reduced respectively to amounts which bear the same ratio to the full credits provided as the number of months in the period for whic h return is made b ears to t welve mon ths . Taxable ye ar in ca se ofleopard Y
(f) CLOSING OF TAXABLE YEAR IN CASE OF JEOPARDY .-For closing . Posr,p . 1703 .
of taxable y ear in c ase of j eopardy, see sec tion 146 .
