Please help answer the following questions. Provide at least 200 words in your explanation.
What is meant by accounting period for tax purposes? What are the general rules regarding selection of an accounting period for tax purposes?© BrainMass Inc. brainmass.com June 3, 2020, 8:09 pm ad1c9bdddf
The question relates to the selection of a year end for tax purposes. Technically speaking, reporting entities could pick any month of the year to end their accounting period. The tax year normally is 12 months long although the first and last reporting periods can be short years. A short year return could be the result of a new business started mid-year, the death of a taxpayer mid-year, sale of a business ...
The solution discusses the general rules for selection of a year end for tax purposes and defines the types of entities which can use a year end other than December 31. Situations where an accounting period can be less than one year are described, plus the one situation where an accounting period can be more than 365 days. The explanation is given in 292 words.