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    Accounting Periods

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    Wilson Corporation currently uses the calendar year as its financial and tax annual accounting period. Management wishes to changes this to a fiscal year beginning October 1st and going through September 30th. Look at the tax law criteria that would be required to make this change and summarize them in a few paragraphs. Based on this, explain why the Wilson Corporation may or may not want to make this change.

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    Solution Preview

    For a calendar year entity to change to a fiscal year, the company must petition the IRS for a change of accounting period. This is not an automatic change. The entity must complete and file Form 1128 to request the change, and the change will only be approved when a substantial business purpose exists. Facts and circumstances must be presented with a timely filed submission.

    Part of the review by IRS will include the tax consequences of the change, but there are also non-tax circumstances that will be reviewed. A common example of a type of change that will probably be confirmed is conformity with the annual cycle of business. For example - a reason ...

    Solution Summary

    This solution looks at a case where a corporation wishes to alter the dates of its fiscal year and explains whether or not this is wise and will be permitted.