# § 443. Returns for a period of less than 12 months
**(a)** **Returns for short period** A return for a period of less than 12 months (referred to in this section as “short period”) shall be made under any of the following circumstances:
**(1)** **Change of annual accounting period** When the taxpayer, with the approval of the Secretary, changes his annual accounting period. In such a case, the return shall be made for the short period beginning on the day after the close of the former taxable year and ending at the close of the day before the day designated as the first day of the new taxable year.
**(2)** **Taxpayer not in existence for entire taxable year** When the taxpayer is in existence during only part of what would otherwise be his taxable year.
**(b)** **Computation of tax on change of annual accounting period**
**(1)** **General rule** If a return is made under paragraph (1) of subsection (a), the taxable income for the short period shall be placed on an annual basis by multiplying the modified taxable income for such short period by 12, dividing the result by the number of months in the short period. The tax shall be the same part of the tax computed on the annual basis as the number of months in the short period is of 12 months.
**(2)** **Exception**
**(A)** **Computation based on 12-month period** If the taxpayer applies for the benefits of this paragraph and establishes the amount of this taxable income for the 12-month period described in subparagraph (B), computed as if that period were a taxable year and under the law applicable to that year, then the tax for the short period, computed under paragraph (1), shall be reduced to the greater of the following:
The taxpayer (other than a taxpayer to whom subparagraph (B)(ii) applies) shall compute the tax and file his return without the application of this paragraph.
**(i)** an amount which bears the same ratio to the tax computed on the taxable income for the 12-month period as the modified taxable income computed on the basis of the short period bears to the modified taxable income for the 12-month period; or
**(ii)** the tax computed on the modified taxable income for the short period.
**(B)** **12-month period** The 12-month period referred to in subparagraph (A) shall be—
**(i)** the period of 12 months beginning on the first day of the short period, or
**(ii)** the period of 12 months ending at the close of the last day of the short period, if at the end of the 12 months referred to in clause (i) the taxpayer is not in existence or (if a corporation) has theretofore disposed of substantially all of its assets.
**(C)** **Application for benefits** Application for the benefits of this paragraph shall be made in such manner and at such time as the regulations prescribed under subparagraph (D) may require; except that the time so prescribed shall not be later than the time (including extensions) for filing the return for the first taxable year which ends on or after the day which is 12 months after the first day of the short period. Such application, in case the return was filed without regard to this paragraph, shall be considered a claim for credit or refund with respect to the amount by which the tax is reduced under this paragraph.
**(D)** **Regulations** The Secretary shall prescribe such regulations as he deems necessary for the application of this paragraph.
**(3)** **Modified taxable income defined** For purposes of this subsection the term “modified taxable income” means, with respect to any period, the gross income for such period minus the deductions allowed by this chapter for such period (but, in the case of a short period, only the adjusted amount of the deductions for personal exemptions).
**(c)** **Adjustment in deduction for personal exemption** In the case of a taxpayer other than a corporation, if a return is made for a short period by reason of subsection (a)(1) and if the tax is not computed under subsection (b)(2), then the exemptions allowed as a deduction under section 151 (and any deduction in lieu thereof) shall be reduced to amounts which bear the same ratio to the full exemptions as the number of months in the short period bears to 12.
**(d)** **Adjustment in computing minimum tax and tax preferences** If a return is made for a short period by reason of subsection (a)—
**(1)** the alternative minimum taxable income for the short period shall be placed on an annual basis by multiplying such amount by 12 and dividing the result by the number of months in the short period, and
**(2)** the amount computed under paragraph (1) of section 55(a) shall bear the same relation to the tax computed on the annual basis as the number of months in the short period bears to 12.
**(e)** **Cross references** For inapplicability of subsection (b) in computing—
For returns for a period of less than 12 months in the case of a debtor’s election to terminate a taxable year, see section 1398(d)(2)(E).
**(1)** Accumulated earnings tax, see section 536.
**(2)** Personal holding company tax, see section 546.
**(3)** The taxable income of a regulated investment company, see section 852(b)(2)(E).
**(4)** The taxable income of a real estate investment trust, see section 857(b)(2)(C).
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**Source Credit**: (Aug. 16, 1954, ch. 736, 68A Stat. 149; Pub. L. 86–779, § 10(i), Sept. 14, 1960, 74 Stat. 1009; Pub. L. 91–172, title III, § 301(b)(6), Dec. 30, 1969, 83 Stat. 585; Pub. L. 94–455, title III, § 301(e), title XII, § 1204(c)(2), title XVI, § 1607(b)(1)(C), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1553, 1697, 1757, 1834; Pub. L. 95–30, title I, § 102(b)(6), May 23, 1977, 91 Stat. 137; Pub. L. 95–600, title IV, § 421(e)(2), title VII, § 703(*o*)(1)–(3), Nov. 6, 1978, 92 Stat. 2876, 2943; Pub. L. 96–222, title I, § 104(a)(4)(H)(iii), Apr. 1, 1980, 94 Stat. 217; Pub. L. 96–589, § 3(d), Dec. 24, 1980, 94 Stat. 3401; Pub. L. 97–448, title III, § 304(a), Jan. 12, 1983, 96 Stat. 2398; Pub. L. 99–514, title I, § 104(b)(7), title VII, § 701(e)(3), Oct. 22, 1986, 100 Stat. 2105, 2342; Pub. L. 108–357, title IV, § 413(c)(6), Oct. 22, 2004, 118 Stat. 1507.)
## Editorial Notes
### Amendments
2004—Subsec. (e)(3) to (5). redesignated pars. (4) and (5) as (3) and (4), respectively, and struck out former par. (3) which read as follows: “Undistributed foreign personal holding company income, see section 557.”
1986—Subsec. (b)(1). , struck out “, and adding the zero bracket amount” after “by the number of months in the short period”.
Subsec. (b)(2)(A)(ii). , amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “the tax computed on the sum of the modified taxable income for the short period plus the zero bracket amount.”
Subsec. (d). , substituted “and tax preferences” for “for tax preferences” in heading and amended text generally. Prior to amendment, subsec. (d) read as follows: “If a return is made for a short period by reason of subsection (a), then—
“(1) in the case of a taxpayer other than a corporation, the alternative minimum taxable income for the short period shall be placed on an annual basis by multiplying that amount by 12 and dividing the result by the number of months in the short period, and the amount computed under paragraph (1) of section 55(a) shall be the same part of the tax computed on the annual basis as the number of months in the short period is of 12 months; and
“(2) the $10,000 amount specified in section 56 (relating to minimum tax for tax preferences), modified as provided by section 58, shall be reduced to the amount which bears the same ratio to such specified amount as the number of days in the short period bears to 365.”
1983—Subsec. (e). substituted “section 1398(d)(2)(E)” for “section 1398(d)(3)(E)”.
1980—Subsec. (d)(2). struck out “in the case of a corporation,” before “the $10,000 amount”.
Subsec. (e). inserted cross reference to section 1398(d)(3)(E) for returns for a period of less than 12 months in the case of a debtor’s election to terminate a taxable year.
1978—Subsec. (b)(1). ()(2), substituted “modified taxable income for such short period” for “gross income for such short period (minus the deductions allowed by this chapter for the short period, but only the adjusted amount of the deductions for personal exemptions)”.
Subsec. (b)(2). ()(1), substituted in cl. (i) “modified taxable income” for “taxable income” in two places and in cl. (ii) “the sum of the modified taxable income” for “the taxable income” and “plus the zero bracket amount” for “without placing the taxable income on an annual basis”.
Subsec. (b)(3). ()(3), added par. (3).
Subsec. (d). , substituted “Adjustment in computing minimum tax for tax preferences” for “Adjustment in exclusion for computing minimum tax for tax preferences” in heading, redesignated existing provisions as par. (2) and as so redesignated applied par. (2) to corporations, and added par. (1).
1977—Subsec. (b)(1). substituted “multiplying the gross income for such short period (minus the deductions allowed by this chapter for the short period, but only the adjusted amount of the deductions for personal exemptions) by 12, dividing the result by the number of months in the short period, and adding the zero bracket amount” for “multiplying such income by 12, and dividing the result by the number of months in the short period”.
1976—Subsec. (a)(1). , struck out “or his delegate” after “Secretary”.
Subsec. (a)(3). , struck out par. (3) which made termination of taxpayer’s taxable year under section 6851 as one of the circumstances under which a tax return for a period of less than 12 months shall be made.
Subsec. (b)(2)(D). , struck out “or his delegate” after “Secretary”.
Subsec. (d). , substituted “$10,000” for “$30,000”.
Subsec. (e)(5). , substituted “section 857(b)(2)(C)” for “section 857(b)(2)(D)”.
1969—Subsecs. (d), (e). added subsec. (d) and redesignated former subsec. (d) as (e).
1960—Subsec. (d)(5). added par. (5).
## Statutory Notes and Related Subsidiaries
### Effective Date of 2004 Amendment
Amendment by applicable to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end, see , set out as an Effective and Termination Dates of 2004 Amendments note under .
### Effective Date of 1986 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
Amendment by applicable to taxable years beginning after , with certain exceptions and qualifications, see , set out as an Effective Date note under .
### Effective Date of 1983 Amendment
> “The amendment made by subsection (a) of section 304 [amending this section] shall take effect as if included in the amendments made by section 3 of the Bankruptcy Tax Act of 1980 [
>
> , which amended this section and sections 6012 and 6103 of this title].”
, , , provided that:
### Effective Date of 1980 Amendment
Amendment by applicable to bankruptcy cases commencing more than 90 days after , see , set out as a note under .
Amendment by effective, except as otherwise provided, as if it had been included in the provisions of the Revenue Act of 1978, , to which such amendment relates, see , set out as a note under .
### Effective Date of 1978 Amendment
> “The amendments made by this subsection [amending this section] shall apply to taxable years beginning after
>
> .”
()(4), , , provided that:
Amendment by applicable to taxable years beginning after , see , set out as a note under .
### Effective Date of 1977 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
### Effective Date of 1976 Amendment
, , , provided that the amendment made by is effective for items of tax preferences for taxable years beginning after , with certain exceptions.
Amendment by effective with respect to action taken under section 6851, 6861, or 6862 of this title where the notice and demand takes place after , see , as amended, set out as a note under .
For effective date of amendment by , see , set out as a note under .
### Effective Date of 1969 Amendment
Amendment by applicable to taxable years ending after , see , set out as a note under .
### Effective Date of 1960 Amendment
Amendment by applicable with respect to taxable years of real estate investment trusts beginning after , see , set out as an Effective Date note under .
### Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States
For applicability of amendment by notwithstanding any treaty obligation of the United States in effect on , see , set out as a note under .