Common use of Treatment of S termination year Clause in Contracts

Treatment of S termination year. In general. If an S election termi- nates under section 1362(d) on a date other than the first day of a taxable year of the corporation, the corpora- tion’s taxable year in which the termi- nation occurs is an S termination year. The portion of the S termination year ending at the close of the day prior to the termination is treated as a short taxable year for which the corporation is an S corporation (the S short year). The portion of the S termination year beginning on the day the termination is effective is treated as a short taxable year for which the corporation is a C corporation (the C short year). Except as provided in paragraphs (b) and (c)(1) of this section, the corporation allo- xxxxx income or loss for the entire year on a pro rata basis as described in sec- tion 1362(e)(2). To the extent that in- come or loss is not allocated on a pro rata basis under this section, items of income, gain, loss, deduction, and cred- it are assigned to each short taxable year on the basis of the corporation’s normal method of accounting as deter- mined under section 446. See, however, § 1.1502–76(b)(1)(ii)(A)(2) for special rules for an S election that terminates under section 1362(d) immediately before the S corporation becomes a member of a consolidated group (within the mean- ing of § 1.1502–1(h)). See § 1.460– 4(k)(3)(iv)(D) for rules relating to the computation of the S corporation’s in- come or loss from a contract accounted for under a long-term contract method of accounting in the S termination year.

Treatment of S termination year. In general. If an S election termi- nates under section 1362(d) on a date other than the first day of a taxable year of the corporation, the corpora- tion’s taxable year in which the termi- nation occurs is an S termination year. The portion of the S termination year ending at the close of the day prior to the termination is treated as a short taxable year for which the corporation is an S corporation (the S short year). The portion of the S termination year beginning on the day the termination is effective is treated as a short taxable year for which the corporation is a C corporation (the C short year). Except as provided in paragraphs (b) and (c)(1) of this section, the corporation allo- xxxxx income or loss for the entire year on a pro rata basis as described in sec- tion 1362(e)(2). To the extent that in- come or loss is not allocated on a pro rata basis under this section, items of income, gain, loss, deduction, and cred- it are assigned to each short taxable year on the basis of the corporation’s normal method of accounting as deter- mined under section 446. See, however, § 1.1502–76(b)(1)(ii)(A)(2) for special rules for an S election that terminates under section 1362(d) immediately before the S corporation becomes a member of a consolidated group (within the mean- ing of § 1.1502–1(h)). See § 1.460– 4(k)(3)(iv)(D) for rules relating to the computation of the S corporation’s in- come or loss from a contract accounted for under a long-term contract method of accounting in the S termination year.