Common use of Recognition period Clause in Contracts

Recognition period. The recogni- tion period is the 10-year (120-month) period beginning on the first day the corporation is an S corporation or the day an S corporation acquires assets in a section 1374(d)(8) transaction. For ex- ample, if the first day of the recogni- tion period is July 14, 1996, the last day of the recognition period is July 13, 2006. If the recognition period for cer- tain assets ends during an S corpora- tion’s taxable year (for example, be- cause the corporation was on a fiscal year as a C corporation and changed to a calendar year as an S corporation or because an S corporation acquired as- sets in a section 1374(d)(8) transaction during a taxable year), the S corpora- tion must determine its pre-limitation amount (as defined in § 1.1374–2(a)(1)) for the year as if the corporation’s books were closed at the end of the rec- ognition period.