accounting period - Management has come to me with the...

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Management has come to me with the notion of changing to a fiscal year that would begin on November 1 st and end on October 31 st . BLC currently uses the calendar year as both their financial and tax year. The purpose of this writing is to outline the criteria that would need to be met in order to make this change. In addition to the criteria that will need to be met I have taken it upon myself to find out how this change could benefit BLC. Accounting Periods The calendar year in which the company currently uses is the most commonly used tax year. BLC must use a tax year to figure its taxable income. A tax year is simply an annual accounting period used by BLC to report the company’s income and expenses as well as other forms of record keeping. A tax year can be either the calendar year or a fiscal year. A calendar year begins January 1 st and ends on December 31 st . A fiscal year is simply any consecutive twelve month period that ends on any day other than December 31 st . For example, BLC could set their fiscal year up to be April 1 st thru March 31 st . Once a calendar year has been adopted by a company such as BLC then the calendar year must be continuously used unless approval to switch to a fiscal year has been granted by the Internal Revenue Service or allowed to change with prior approval from the Internal Revenue Service (Publication 538, 2008). 52-53 Week Tax Year If desired BLC could elect the fiscal year to be a 52-53 week tax year. To make this election BLC would be required to keep its books and other records as well as report the company’s income and expenses on that basis. When using this election the tax year will always have to end on the same day of the week of each year. The tax year under this election would always have to end on whatever date this same day of the week last occurs in a calendar month
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or whatever day of the week that this same day falls closest to the last day of the calendar month. If BLC desired to use a 52-53 week year then they must attachment a statement to their tax return that states the month in which the tax year ends, the day of the week that each tax year will end on, and the date that the current tax year ends. For example, if BLC were to adopt this type of tax
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accounting period - Management has come to me with the...

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