1128 Instructions for Form 1128

Instructions for Form 1128

Department of the Treasury
Internal Revenue Service

(Rev. November 2017)

(Use with the October 2014 revision of Form 1128)
Application To Adopt, Change, or Retain a Tax Year
Section references are to the Internal
Revenue Code unless otherwise noted.

General Instructions
Future Developments

For the latest information and
developments related to Form 1128
and its instructions, such as
legislation enacted after this form and
its instructions were published, go to
IRS.gov/Form1128.

Purpose of Form

File Form 1128 to request a change in
tax year. Partnerships, S corporations,
personal service corporations (PSCs),
or trusts may be required to file Form
1128 to adopt or retain a certain tax
year.
Part II is used for an automatic
approval request. If the applicant does
not qualify for automatic approval,
Part III is used for a ruling request.

Who Must File

Generally, taxpayers must file Form
1128 to adopt, change, or retain a tax
year. However, see Exceptions, later.
The common parent of a
consolidated group that files a
consolidated return files one Form
1128 for the consolidated group. In
addition, the common parent
corporation must (a) indicate that the
Form 1128 is for the common parent
corporation and all its subsidiaries
and (b) answer all relevant questions
on the application for each member of
the consolidated group.

If a consolidated group filing a
consolidated return wants to change
its tax year by using Rev. Proc.
2006-45, 2006-45 I.R.B. 851 at
www.irs.gov/irb/2006-45_IRB/
index.html (or its successor), every
member of the group must meet the
revenue procedure requirements.
If a controlled foreign corporation
(CFC) or 10/50 corporation
(noncontrolled section 902
corporation) does not have a U.S.
Oct 24, 2017

trade or business, then the CFC's
controlling domestic shareholder(s)
must file Form 1128 on behalf of such
foreign corporation to change its tax
year (except as provided above with
respect to a controlling domestic
shareholder that is a member of a
consolidated group). See Regulations
section 1.964-1(c)(5) for the definition
of controlling domestic shareholders
of a CFC or 10/50 corporation.
If Form 1128 is filed on behalf of a
CFC or 10/50 corporation, each
controlling domestic shareholder must
attach to its tax return a copy of the
form and all other domestic
shareholders must be provided a
written notice of the election. See
Regulations section 1.964-1(c)(3) for
details.

Exceptions

Do not file Form 1128 in the following
circumstances.

Corporations

A corporation adopting its first tax
year.
A corporation required to change its
tax year to file a consolidated return
with its new common parent (see
Regulations sections 1.442-1(c) and
1.1502-76(a)).
A foreign sales corporation (FSC)
or an interest charge domestic
international sales corporation
(IC-DISC) changing to the tax year of
the U.S. shareholder with the highest
percentage of voting power (see
section 441(h)). Also see Temporary
Regulations section 1.921-1T(b)(4).
However, a FSC or IC-DISC must file
Form 1128 to change its tax year
concurrently, if a tax year change has
been made by the U.S. shareholder.

Partnerships, S Corporations,
and Personal Service
Corporations

A newly formed partnership
adopting a required tax year or a
52-53-week tax year with reference to
such required tax year.
Cat. No. 61752V

A partnership, S corporation, or
PSC terminating its section 444
election (see Temporary Regulations
section 1.444-1T(a)(5)).
A newly formed partnership, an
electing S corporation, or a newly
formed PSC that elects under section
444 a tax year other than the required
tax year by filing Form 8716, Election
To Have a Tax Year Other Than a
Required Tax Year.
A corporation electing to be treated
as an S corporation by filing Form
2553, Election by a Small Business
Corporation, and requesting to
change or retain its tax year.

Exempt Organizations

An organization exempt under section
501(a) does not file Form 1128 unless
the organization has changed its tax
year at any time within a
10-calendar-year period, and the
organization has had an annual filing
requirement during that 10-year
period (see Rev. Proc. 85-58, 1985-2
C.B. 740). This exception does not
apply to organizations exempt from
tax under section 521, 526, 527, or
528; organizations described in
section 401(a); and organizations
involved in a group change in tax year
for all its subordinate organizations.

Individuals

Newly married individuals changing to
the tax year of the other spouse in
order to file a joint return do not file
Form 1128. Regulations section
1.442-1(d) must be followed.

Trusts

A trust (other than a tax-exempt
trust, charitable trust, or a grantor trust
under Rev. Rul. 90-55, 1990-2 C.B.
161) that adopts the calendar year as
required by section 644.
Certain revocable trusts electing to
be treated as part of an estate.
An employee plan or trust filing
Form 5308, Request for Change in
Plan/Trust Year, to change its plan or
trust year.

Estates

An estate adopting its first tax year.

When To File
Tax Year Adoption, Change, or
Retention

To request a ruling to adopt,
change, or retain a tax year, file Form
1128 by the due date (not including
extensions) of the federal income tax
return for the first effective year. Do
not file earlier than the day following
the end of the first effective year. In
the case of a change in tax year, the
first effective year is the short period
required to effect the change.
To request automatic approval to
change a tax year under Rev. Proc.
2006-45 (Form 1128, Part II,
Section A) or Rev. Proc. 2006-46,
2006-45 I.R.B. 859 at www.irs.gov/irb/
2006-45_IRB/index.html (Form 1128,
Part II, Section B), file by the due date
of the return (including extensions) for
the short period required to effect the
change. A Form 1128 filed by a
controlling domestic shareholder (or
its common parent) on behalf of a
CFC or 10/50 corporation is due no
later than the due date (including
extensions) of that shareholder's (or
its common parent's) income tax
return for its tax year with or within
which ends the first effective year of
the CFC or 10/50 corporation.
For an individual filing to change to
a calendar year under Rev. Proc.
2003-62, 2003-32 I.R.B. 299 at
www.irs.gov/irb/2003-32_IRB/
index.html (Form 1128, Part II,
Section C), Form 1128 must be filed
on or before the due date (including
extensions) for filing the federal
income tax return for the short period
required to effect the change.
To change a tax year under Rev.
Proc. 85-58 (Form 1128, Part II,
Section D), file by the 15th day of the
5th calendar month after the end of
the short period.

Late Applications

Generally, an application filed after
the appropriate due date stated above
is considered late.

However, applications filed within
90 days after the due date may be
considered as timely filed when the
applicant establishes that:
1. The taxpayer acted reasonably
and in good faith, and

2. Granting relief will not prejudice
the interests of the government.
Applications that are filed more
than 90 days after the due date are
presumed to jeopardize the interests
of the government, and will be
approved only in unusual and
compelling circumstances.
Under either circumstance, an
extension request must be filed under
Regulations section 301.9100-3 and
is a ruling request under Rev. Proc.
2017-1, I.R.B. 1 at www.irs.gov/irb/
2017-1_IRB/ar07.html (updated
annually). The extension is also
subject to public inspection under
section 6110.
See section 7 of Rev. Proc. 2017-1
for information on requesting a ruling.
Note. An extension request under
Rev. Proc. 2017-1 (or its successor)
requires payment of a user fee.

Early Applications

Generally, an application to adopt or
change a tax year will not be
considered if it is submitted before the
end of the short period.

Where To File
Part II—Automatic Approval
Request

If Part II (automatic approval request)
applies to the applicant, file Form
1128 with:
Internal Revenue Service Center
Attention: Entity Control

Use the address where the applicant's
income tax return is filed. See the
instructions for the applicant's income
tax return. The applicant must also
attach a copy of Form 1128 to the
federal income tax return filed for the
short period required to effect the
change.
Do not file a request for
automatic approval with either
CAUTION address below in Part
III—Ruling Request. Doing so will
result in a significant delay in the
processing of your request.

!

CFCs and 10/50 corporations. If
the form is filed on behalf of a CFC or
10/50 corporation, the controlling
domestic shareholder who retains the
jointly executed consent described in
Regulations section 1.964-1(c)(3)(ii)
-2-

must file Form 1128 with its tax return
for its tax year with or within which
ends the first effective year of the CFC
or the 10/50 corporation. The other
controlling domestic shareholder(s)
must attach a copy of the form to its
income tax return for its tax year with
or within which ends the tax year of
the CFC or 10/50 corporation.
Note. If a corporation is required to
file Form 1128 with its tax return and
is a member of an affiliated group of
corporations filing a consolidated
return, the common parent must file
the Form 1128 with the consolidated
return.
Applications prior to an election to
become an S corporation. If a
corporation is requesting to change its
tax year prior to making an election to
become an S corporation and the
requested tax year is a permitted tax
year for S corporations (for example,
a calendar tax year), file Form 1128
as an attachment to Form 2553. See
Form 1128, Part II, line 2. Do not file
Form 1128 with the above address for
automatic approval requests. For
information on where to file Form
2553, see the Instructions for Form
2553.

Part III—Ruling Request

If Part III (ruling request) applies to the
applicant, file Form 1128 and the
appropriate user fee with the IRS
National Office. Mail Form 1128 to:
Internal Revenue Service
Associate Chief Counsel (Income
Tax and Accounting)
Attention: CC:PA:LPD:DRU
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044-7604
The IRS will acknowledge receipt
of the application within 45 days. You
can inquire about the status of the
application by writing to:
Control Clerk, CC:ITA
Internal Revenue Service
Room 4516
1111 Constitution Ave., NW
Washington, DC 20224-0002
The applicant will receive
notification of its approval or denial. If
no communication is received from
the IRS regarding the application
within 90 days, contact the Control
Clerk.

Exempt organizations requesting a
ruling should send Form 1128 and
any applicable user fee to:
Internal Revenue Service
1973 N Rulon White Blvd
M/S 6273
Ogden, Utah 84201
You can inquire about the status of
an application for exempt
organizations by calling
877-829-5500.

Who Must Sign

Except as discussed below (regarding
automatic approval requests filed on
behalf of a CFC or 10/50 corporation),
Form 1128 must be signed by the filer
as discussed below. A valid signature
by the individual or an officer of the
organization is required on Form
1128. If the form does not have a valid
signature, it will not be considered.

Individuals

If filing a joint return, both spouses
must sign.

Partnerships

Include the signature, name and title
of a general partner on behalf of a
state law partnership, or a
member-manager on behalf of a
limited liability company.

Estates

Include the signature, name, and title
of the fiduciary or other person legally
authorized to sign.

Trusts

Include the signature, name, and title
of the fiduciary or other person legally
authorized to sign.

Tax-Exempt Organizations

Include the signature, name, and title
of a principal officer or other person
legally authorized to sign.

CFC or 10/50 Corporation

For a CFC or 10/50 corporation with a
U.S. trade or business and filing Form
1128 as the applicant, follow the same
rules as other corporations (see All
Other Filers, later). If the form is being
filed on behalf of a CFC or 10/50
corporation by its controlling domestic
shareholder(s), follow the instructions
below for ruling requests and
automatic approval requests.
Ruling request. A ruling request
application that is filed on behalf of a

CFC or 10/50 corporation must be
signed by an authorized officer of the
designated (controlling domestic)
shareholder that retains the jointly
executed consent as provided for in
Regulations section 1.964-1(c)(3)(ii).
A schedule listing the name(s) and
identifying number(s) of the controlling
domestic shareholder(s) must be
attached to the application. Also, the
controlling domestic shareholder(s)
must satisfy the requirements of
Regulations section 1.964-1(c)(3). If
the designated (controlling domestic)
shareholder is a member of a
consolidated group, then an
authorized officer of the common
parent must sign. Do not sign the
copy of Form 1128 filed with the
income tax return.
Automatic approval request. An
automatic ruling request application
that is filed on behalf of a CFC or
10/50 corporation does not have to be
signed. However, the controlling
domestic shareholder completing the
form must satisfy the requirements of
Regulations section 1.964-1(c)(3) and
retain the jointly executed consent
described in Regulations section
1.964-1(c)(3)(ii).

should not complete the “Paid
Preparer's Use Only” section.

Specific Instructions
Part I—General
Information

All applicants must complete Part I.
Attachments to Form 1128 must show
the applicant's name, identifying
number, and the address. Also
indicate that the statement is an
attachment to Form 1128.

Name

In general, the filer of the form is the
applicant. If filing a joint return, include
the names of both spouses. If the
applicant is a corporation,
partnership, estate, trust, or
tax-exempt organization, etc., enter
the name of the entity or organization.

If the filer is a corporation, the
application must include the signature
of the president, vice president,
treasurer, assistant treasurer, or chief
accounting officer (such as tax officer)
authorized to sign, and their official
title. Receivers, trustees, or assignees
must sign any application they are
required to file. For a consolidated
group filing a consolidated return with
its common parent, Form 1128 should
be signed by an authorized officer of
the common parent corporation.

Filer different from applicant. For
members of a consolidated group of
corporations and certain foreign
corporations, Form 1128 may be filed
on behalf of the applicant. For a
consolidated group of corporations,
enter the name and employer
identification number (EIN) of the
parent corporation on the first line as
the filer and enter the name(s) and
EIN(s) of the member corporations
applying for a change in accounting
period on the fourth line. For CFCs
and 10/50 corporations, enter the
name and EIN of the controlling
domestic shareholder(s) (common
parent, if applicable) on the first line
and the name and EIN, if any, of the
foreign corporation on the fourth line.
If there is more than one filer or
applicant, attach a statement listing
each filer's or applicant's name and
EIN.

Paid Preparer

Identifying Number

All Other Filers

Generally, anyone who is paid to
prepare Form 1128 must sign it and fill
in the “Paid Preparer Use Only” area.
The paid preparer must complete the
required information and sign the
return in the space provided for the
preparer's signature. However, if the
applicant is requesting automatic
approval and a copy of Form 1128 is
attached to the income tax return, the
copy of Form 1128 does not have to
be signed.

Note. Anyone who prepares Form
1128 but does not charge a fee
-3-

Individuals enter their social security
number (SSN). If filing a joint income
tax return, enter the SSN of both
spouses. However, if one or both
spouses are engaged in a trade or
business and Form 1128 is filed on
behalf of the business, enter the EIN
instead of the SSNs. All other
applicants enter their EIN.
You can apply for an EIN online
(only for applicants in the United
States or U.S. possessions), by
telephone (only for applicants outside
of the United States or U.S.
possessions), or by fax or by mail

using Form SS-4, Application for
Employer Identification, depending on
how soon you need to use the EIN.
Use only one method for each entity
so you don't receive more than one
EIN for an entity. For more information
on applying for an EIN, see the
Instructions for Form SS-4.
An SSN must be applied for on
Form SS-5, Application for a Social
Security Card. Form SS-5 can be
obtained at SSA offices or by calling
the SSA at 1-800-772-1213 (TTY 1–
800–325–0778). It is also available
from the SSA website at SSA.gov.
If the applicant has not received its
EIN or SSN by the time the application
is due, write “Applied for” in the space
for the identifying number.
Foreign corporations. If the
applicant is a foreign corporation that
is not otherwise required to have or
obtain an EIN, enter “Not applicable”
in the space provided for the
identifying number.

Address

Include the suite, room, or other unit
number after the street address. If the
Post Office does not deliver mail to
the street address and the filer has a
P.O. box, show the box number
instead.
If the filer receives its mail in care of
a third party (such as an accountant or
attorney), enter on the street address
line “C/O” followed by the third party's
name and street address or P.O. box.

Person To Contact

The person to contact must be the
person authorized to sign the Form
1128, or the applicant's authorized
representative. If the person to
contact is not the filer or the applicant,
attach Form 2848, Power of Attorney
and Declaration of Representative.

Line 1. Check all applicable box(es)
to indicate the type of entity filing this
application. For example, an entity
that is a domestic corporation may
also be a regulated investment
company (RIC). That entity would
check both the “Domestic corporation”
box and the “Other” box, and write,
“RIC under sec. 851” on the dotted
line.
Lines 2a and 2b. If the requested
year is a 52-53-week tax year,
describe the year (for example, last
Saturday in December or Saturday

nearest to December 31). A
52-53-week tax year must end on the
date a specified day of the week last
occurs in a particular month or on the
date that day of the week occurs
nearest to the last day of a particular
calendar month.
A newly formed partnership or PSC
that wants to adopt a tax year other
than its required tax year must go to
Part III after completing Part I.
Line 2c. An applicant's first tax year
generally starts when business
operations begin.
A corporation's tax year begins at
the earliest date it first:
Has shareholders,
Has assets, or
Begins doing business.
The initial year ends on the day before
the first day of the new tax year.
If the applicant is changing a tax
year, the required short period return
(usually for a period of less than 12
months) is for the period that begins
on the day following the close of the
old tax year and ends on the day
before the first day of the new tax
year.
For example, in 2017, a
corporation, which has a tax year
ending December 31, requests a new
tax year ending March 31. The
corporation's first effective tax year
(short year) begins on January 1,
2017, and ends on March 31, 2017.

Part II—Automatic
Approval Request

Note. All references to the Revenue
Procedures listed are to that Revenue
Procedure or its successor.
Part II is completed by applicants
requesting automatic approval of a
change in tax year under:
Rev. Proc. 2006-45 (corporations)
as clarified and modified by Rev.
Proc. 2007-64, 2007-42 I.R.B. 818 at
www.irs.gov/irb/2007-42_IRB/
index.html,
Rev. Proc. 2006-46 (pass-through
entities),
Rev. Proc. 2003-62 (individuals),
Rev. Proc. 76-10, 1976-1 C.B. 548
as modified by Rev. Proc. 79-3,
1979-1 C.B. 483, and Rev. Proc.
85-58 (exempt organizations), and
Rev. Proc. 85-15, 1985-1 C.B. 516
(all filers), to correct the adoption of
an improper tax year to a calendar
year by filing an amended return on a
-4-

calendar year basis and attaching
Form 1128. If the applicants want to
change to a fiscal year, file a Form
1128 under the procedures of either
Rev. Proc. 2006-45, 2006-46,
2002-39, 2002-1 C.B. 1046 or any
successor.
Note. Applicants requesting an
automatic approval must complete
Parts I and II only.
A user fee is not required if

TIP requesting an automatic

approval under any of the
sections of Part II listed below.
Complete Part II if the applicant can
use the automatic approval rules
under one of the sections listed below
and the application is filed on time.
Section of Part II of Form 1128 To
Complete
If the applicant is:

Complete
only:

A corporation (other than an S
corporation or a PSC)

Section A

A partnership, S corporation,
PSC, or a trust

Section B

An individual

Section C

A tax-exempt organization

Section D

If the applicant does not qualify for
automatic approval, a ruling must be
requested. See Part III for more
information.
If the Service Center denies
approval because Form 1128 was not
filed on time, the applicant can
request relief under Regulations
section 301.9100-3, discussed earlier
under Late Applications. The
applicant completes Part III, as
discussed later, and sends Form 1128
to the IRS National Office for
consideration.

Section A—Corporations
(Other Than S Corporations or
Personal Service Corporations)

Rev. Proc. 2006-45 provides
exclusive procedures for a
corporation to obtain automatic
approval to change its annual
accounting period under section 442
and Regulations section 1.442-1(b). A
corporation complying with all the
applicable provisions of this revenue
procedure will be deemed to have

established a business purpose and
obtained the approval of the IRS to
change its accounting period. See
Rev. Proc. 2006-45 for more
information.
Line 1. A corporation is not allowed
to use the automatic approval rules
under section 4 of Rev. Proc. 2006-45
if it:
1. Has changed its annual
accounting period at any time within
the most recent 48-month period
ending with the last month of the
requested tax year. For exceptions,
see section 4.02(1) of Rev. Proc.
2006-45.
2. Has an interest in a
pass-through entity as of the end of
the short period. For exceptions, see
section 4.02(2) of Rev. Proc. 2006-45.
3. Is a shareholder of a FSC or
IC-DISC, as of the end of the short
period. For exceptions, see section
4.02(3) of Rev. Proc. 2006-45.
4. Is a FSC or an IC-DISC.
5. Is an S corporation.
6. Attempts to make an S
corporation election for the tax year
immediately following the short
period, unless the change is to a
permitted S corporation tax year.
7. Is a PSC.
8. Is a CFC. For exceptions, see
section 4.02(8) of Rev. Proc. 2006-45.
9. Is a tax-exempt organization,
other than an organization exempt
from tax under section 521, 526, 527,
or 528.
10. Is a cooperative association
(within the meaning of section
1381(a)) with a loss in the short period
required to effect the change of
annual accounting period, unless the
patrons of the cooperative association
are substantially the same in the year
before the change of annual
accounting period, in the short period
required to effect the change, and in
the year following the change.
11. Is a corporation leaving a
consolidated group. The corporation
is not allowed to use the automatic
approval request procedures during
the consolidated group's tax year in
which the corporation ceased to be a
member of the consolidated group.
See Rev. Proc. 2007-64 for details.
12. Has a required tax year (for
example, a real estate investment
trust), unless the corporation is

changing to its required tax year and
is not described in items (1) through
(11), above.
Note. If the corporation is not allowed
to use the automatic approval rules
because of items (1), (2), or (3), listed
above, it can nevertheless
automatically change to a natural
business year that meets the
25-percent gross receipts test
described in section 5.04 of Rev.
Proc. 2006-45.
If the answer to the question on
Part II, Section A, line 1, is “Yes,” sign
Form 1128 and see
Part II—Automatic Approval Request
earlier under Where To File. Do not
complete Part III. If the corporation is
requesting to change to a natural
business year that satisfies the
25-percent gross receipts test, also
include its gross receipts for the most
recent 47 months (or for any
predecessor).
If the answer to the question on
Part II, Section A, line 1, is “Yes”
because the applicant is a CFC that
wants to make a one-month deferral
election under section 898(c)(2), see
Rev. Proc. 2007-64 which modifies
the terms and conditions for this
election provided in Rev. Proc.
2006-45. If a CFC wants to revoke its
one-month deferral election under
section 898(c)(2) and change its tax
year to the majority U.S. shareholder
year (as defined in section 898(c)(3)),
the CFC's controlling domestic
shareholders must indicate the
change in the tax year on the Form
5471, Information Return of U.S.
Persons With Respect To Certain
Foreign Corporations, filed with
respect to the CFC's first effective
year.
If the answer to the question on
Part II, Section A, line 1, is “No,” go to
Part III.
Line 3. If a corporation's interest in a
pass-through entity, CFC, FSC, or
IC-DISC (related entity) is disregarded
under section 4.02(2) or 4.02(3) of
Rev. Proc. 2006-45 because the
related entity is required to change its
tax year to the corporation's new tax
year (or, in the case of a CFC, to a tax
year beginning one month earlier than
the corporation's new tax year), the
related entity must change its tax year
concurrently with the corporation's
change in tax year, under Rev. Proc.
-5-

2006-45. This related party change is
required notwithstanding the testing
date provisions in section 706(b)(4)
(A)(ii), section 898(c)(3)(B),
Temporary Regulations section
1.921-1T(b)(6), and the special
provision in section 706(b)(4)(B).

Section B—Partnerships, S
Corporations, Personal Service
Corporations, and Trusts
Rev. Proc. 2006-46 provides
exclusive procedures for a
partnership, S corporation, PSC, or
trust within its scope to adopt,
change, or retain its annual
accounting period under section 442
and Regulations section 1.442-1(b).

Rev. Proc. 2006-46 generally
applies to trusts that are using an
incorrect tax year and want to change
to the required calendar tax year.
However, exceptions apply to trusts
exempt from taxation under section
501(a), charitable trusts described in
section 4947(a)(1), and grantor trusts
described in Rev. Rul 90-55.
Line 4. A partnership, S corporation,
PSC, or trust is precluded from using
the automatic approval rules under
section 4 of Rev. Proc. 2006-46 if any
of the following apply:
1. The entity is under examination,
unless it complies with the procedures
provided in section 7.03(1) of Rev.
Proc. 2006-46.
2. The entity is before an appeals
office with respect to any income tax
issue and its annual accounting
period is an issue under consideration
by the appeals office.
3. The entity is before a federal
court with respect to any income tax
issue and its annual accounting
period is an issue under consideration
by the federal court.
4. On the date the partnership or S
corporation would otherwise file its
application, the partnership's or S
corporation's annual accounting
period is an issue under consideration
in the examination of a partner's or
shareholder's federal income tax
return or an issue under consideration
by an area office or by a federal court
with respect to a partner's or
shareholder's federal income tax
return.
Note. If any of the above
circumstances apply, you may still be
eligible under the automatic approval

request procedures if you comply with
the procedures explained following
item 5 below. See section 7.03 of
Rev. Proc. 2006-46 for more
information.
5. The entity has changed its
annual accounting period at any time
within the most recent 48-month
period ending with the last month of
the requested tax year. For this
purpose, the following changes are
not considered prior changes in
annual accounting period: (a) a
change to a required tax year or
ownership tax year; (b) a change from
a 52-53-week tax year to a
non-52-53-week tax year that ends
with reference to the same calendar
month, and vice versa; or (c) a
change in accounting period by an S
corporation or PSC, in order to comply
with the common tax year
requirements of Regulations sections
1.1502-75(d)(3)(v) and 1.1502-76(a).
If the answer to the question on
Part II, Section B, line 4, is “Yes,” and
any of the following situations apply,
the applicable additional procedures
described below must be followed.
The applicant is under examination
and has obtained the consent of the
appropriate director to the change or
retention of the applicant's annual
accounting period. The applicant must
attach to the application a statement
from the director consenting to the
change or retention. The applicant
must also provide a copy of the
application to the director at the same
time it files the application with the
Service Center. The application must
contain the name(s) and telephone
number(s) of the examination
agent(s).
The applicant is before an appeals
office and the applicant's annual
accounting period is not an issue
under consideration by the appeals
office. The applicant must attach to
the application a separate statement
signed by the applicant certifying that,
to the best of the applicant's
knowledge, the applicant's annual
accounting period is not an issue
under consideration by the appeals
office. The applicant must also
provide a copy of the application to
the appeals officer at the same time it
files the application with the Service
Center. The application must contain
the name and telephone number of
the appeals officer.

The applicant is before a federal
court and the applicant's annual
accounting period is not an issue
under consideration by the federal
court. The applicant must attach to the
application a separate statement
signed by the applicant certifying that,
to the best of the applicant's
knowledge, the applicant's annual
accounting period is not an issue
under consideration by the federal
court. The applicant must also provide
a copy of the application to the
government counsel at the same time
it files the application with the Service
Center. The application must contain
the name and telephone number of
the government counsel.
If the answer to the question on
Part II, Section B, line 4, is “No”
because the applicant (or a partner or
shareholder) is under examination
and has not obtained the appropriate
director's consent to the change or
retention of the applicant's annual
accounting period or the applicant is
before an appeals office or federal
court and the applicant's annual
accounting period is an issue under
consideration by the appeals office or
federal court, do not complete Part III.
If the answer to line 4 is “No” solely
because of a prior change as
described in item (5) above, go to Part
III after completing Section B.
If the answer to line 4 is “Yes” (and
the answer to line 5, 6, or 7 is also
“Yes”), sign Form 1128 and see Part
II—Automatic Approval Request
under Where To File, earlier. Do not
complete Part III. If the answer to
line 4 is “Yes” (and the answer to
line 5, 6, or 7 is “No”), go to Part III.
Line 6. A partnership, S corporation,
electing S corporation, or PSC
establishes a "natural business year"
under Rev. Proc. 2006-46 by
satisfying the following "25-percent
gross receipts test." The applicant
must supply its gross receipts for the
most recent 47 months (or for any
predecessor) to compute the
25-percent gross receipts test.
1. Prior 3 years gross receipts:
a. Gross receipts from sales and
services for the most recent 12-month
period that ends with the last month of
the requested annual accounting
period are totaled and then divided
into the amount of gross receipts from
sales and services for the last 2
months of this 12-month period.
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b. The same computation as in a,
above, is made for the two preceding
12-month periods ending with the last
month of the requested annual
accounting period.
2. Natural business year:
a. Except as provided in b, below,
if each of the three results described
in 1 above equals or exceeds 25
percent, then the requested annual
accounting period is deemed to be the
taxpayer's natural business year.
b. The taxpayer must determine
whether any annual accounting period
other than the requested annual
accounting period also meets the
25-percent test described in a, above.
If one or more other annual
accounting periods produce higher
averages of the three percentages
(rounded to 1/100 of a percent)
described in 1 above than the
requested annual accounting period,
then the requested annual accounting
period will not qualify as the
taxpayer's natural business year.
3. Special rules:
a. To apply the 25-percent gross
receipts test for any particular year,
the taxpayer must compute its gross
receipts under the method of
accounting used to prepare its federal
income tax returns for such tax year.
b. If the taxpayer has a
predecessor organization and is
continuing the same business as its
predecessor, the taxpayer must use
the gross receipts of its predecessor
for purposes of computing the
25-percent gross receipts test.
c. If the taxpayer (including any
predecessor organization) does not
have a 47-month period of gross
receipts (36-month period for the
requested tax year plus an additional
11-month period for comparing the
requested tax year with other potential
tax years), then it cannot establish a
natural business year under this
revenue procedure.
d. If the requested tax year is a
52-53-week tax year, the calendar
month ending nearest to the last day
of the 52-53-week tax year is treated
as the last month of the requested tax
year for purposes of computing the
25-percent gross receipts test.
Line 7. For an S corporation, an
"ownership tax year" is the tax year
other than a calendar year (if any)

that, as of the first day of the first
effective year, constitutes the tax year
of one or more shareholders
(including any shareholder that
concurrently changes to such tax
year) holding more than 50 percent of
the corporation's issued and
outstanding shares of stock. For this
purpose, a shareholder that is
tax-exempt under section 501(a) is
disregarded if such shareholder is not
subject to tax on any income
attributable to the S corporation.
Tax-exempt shareholders are not
disregarded, however, if the S
corporation is wholly owned by such
tax-exempt entities. A shareholder in
an S corporation that wants to
concurrently change its tax year must
follow the instructions generally
applicable to taxpayers changing their
tax years contained in Regulations
section 1.442-1(b), Rev. Proc.
2002-39, or any other applicable
administrative procedure published by
the IRS.
Line 8. Answer “Yes” if the
partnership is a related entity that
must concurrently change its tax year
as a term and condition of the
approval of the taxpayer's request to
change its tax year.

Section C—Individuals
Line 9. If the answer to this question
is “Yes,” and the restrictions of section
4.02 of Rev. Proc. 2003-62 (or its
successor) do not apply, sign Form
1128 and see Part II—Automatic
Approval Request earlier under
Where To File. Do not complete Part
III. If the answer to this question is
“No,” go to Part III.

Section D—Tax-Exempt
Organizations

A tax-exempt organization can
request a change to its tax year under
the simplified method of either Rev.
Proc. 85-58 or Rev. Proc. 76-10.
Under Rev. Proc. 85-58, an
organization exempt under section
501(a) does not have to file Form
1128 unless the following conditions
described in section 3.03 of Rev.
Proc. 85-58 apply.
1. The organization was required
to file an annual information return or
Form 990-T, Exempt Organization
Business Income Tax Return, at any
time during the last 10 calendar years;
and

2. The organization has changed
its tax year at any time within the last
10 calendar years ending with the
calendar year that includes the
beginning of the short period resulting
from the change of tax year.
An organization described in
section 501(c) or (d) is exempt from
tax under section 501(a) unless the
exemption is denied under section
502 or 503.
Rev. Proc. 85-58 does not apply to:
Farmers' cooperatives exempt from
federal income tax under section 521;
Organizations described in sections
526, 527, and 528;
Organizations described in section
401(a); and
Organizations requesting a change
in a tax year on a group basis.
A central organization should follow
Rev. Proc. 76-10 to apply for a group
change in tax year for all its
subordinate organizations.
Rev. Proc. 76-10 does not apply to:
Farmers' cooperatives exempt from
federal income tax under section 521,
Certain organizations that have
unrelated business taxable income
defined in section 512(a), and
Organizations that are private
foundations defined in section 509(a).
Line 10. If the answer to this question
is “Yes,” and the organization is a
section 501(a) organization to which
section 3.03 of Rev. Proc. 85-58
applies or a central organization to
which Rev. Proc. 76-10 applies, sign
Form 1128 and see Part II—Automatic
Approval Request earlier under
Where To File. Do not complete Part
III.
If the answer to this question is
“Yes,” and Rev. Proc. 85-58 and
76-10 do not apply, go to Part III.

Part III—Ruling Request

Part III is completed only by applicants
requesting to adopt, change, or retain
a tax year that cannot use the
automatic procedures listed in Part II.
Also, the applicant must complete
the specific section(s) in Part III that
applies to that particular applicant.

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Sections of Part III of Form 1128
to Complete
If the applicant is:

Complete only:

A corporation (other than Sections A and
an S corporation, 10/50
B, plus any other
corporation, or CFC)
applicable
section in Part III
An S corporation

Sections A and C

A partnership

Sections A and D

An Estate

Sections A and G

An individual

Section A

A CFC or 10/50
corporation

Sections A and E

!

CAUTION

Do not file a tax return using
the requested tax year until
this application is approved.

Rev. Proc. 2002-39 provides the
general procedures for obtaining
approval to adopt, change, or retain a
tax year for taxpayers not qualifying
under the automatic approval rules or
if the application is late.

Section A—General Information

All applicants must complete this
section to request a ruling on an
adoption of, change to, or retention of
a tax year.

Line 1. If the applicant is a
partnership, S corporation, personal
service corporation, or trust and any
of the following situations apply, the
applicable additional procedures
described below must be followed.
The applicant is under examination
and has obtained the consent of the
appropriate director to the change or
retention of the applicant's annual
accounting period. The applicant must
attach to the application a statement
from the director consenting to the
change or retention of its annual
accounting period. The applicant must
also provide a copy of the application
to the director at the same time it files
the application with the IRS National
Office. The application must contain
the name(s) and telephone number(s)
of the examination agent(s).
The applicant is before an appeals
office and the applicant's annual
accounting period is not an issue
under consideration by the appeals
office. The applicant must attach to
the application a separate statement
signed by the appropriate person
certifying that, to the best of that

person's knowledge, the entity's
annual accounting period is not an
issue under consideration by the
appeals office. The applicant must
also provide a copy of the application
to the appeals officer at the same time
it files the application with the IRS
National Office. The application must
contain the name and telephone
number of the appeals officer.
The applicant is before a federal
court and the applicant's annual
accounting period is not an issue
under consideration by the federal
court. The applicant must attach to the
application a separate statement
signed by the appropriate person
certifying that, to the best of that
person's knowledge, the entity's
annual accounting period is not an
issue under consideration by the
federal court. The applicant must also
provide a copy of the application to
the government counsel at the same
time it files the application with the
IRS National Office. The application
must contain the name and telephone
number of the government counsel.
Line 4a. Attach an explanation of the
legal basis supporting the requested
tax year. Include all authority
(statutes, regulations, etc.) supporting
the requested year. The applicant is
encouraged to include all relevant
facts and circumstances that may
establish a business purpose.
Line 4b. If the applicant requests to
establish a natural business year
under the annual business cycle test
or seasonal business test of sections
5.03(1) and 5.03(2) of Rev. Proc.
2002-39, it must provide its gross
receipts from sales or services and
approximate inventory costs (where
applicable) for each month in the
requested short period and for each
month of the three immediately
preceding tax years.
If the applicant is requesting to
change to a natural business year that
satisfies the 25-percent gross receipts
test described in section 5.03(3) of

Rev. Proc. 2002-39, the applicant
must supply its gross receipts for the
most recent 47 months (or for any
predecessor).
Line 14. Applicants filing to request a
letter ruling on a change in tax year
under Rev. Proc. 2017-1 or its
successor (updated annually) and
Rev. Proc. 2002-39 must pay a user
fee. A request for an exempt
organization letter ruling on a change
in tax year under Rev. Proc. 2017-5,
2017-1 I.R.B. 230 at www.irs.gov/irb/
2017-01_IRB/ar03.html, also requires
payment of a user fee.
A separate user fee is also required
for applicants filing a letter ruling
request for an extension of time to file
under Regulations section 301.9100-3
(including requests under Rev. Procs.
2006-45, 2006-46, and 2003-62
(Form 1128, Part II, Sections A, B,
and C)).
Note. The user fees referred to in the
above paragraphs are published in
Rev. Proc. 2017-1 (exempt
organizations, see Rev. Proc.
2017-4), or an annual update. The
annual updates are published as
revenue procedures in the Internal
Revenue Bulletin. The Internal
Revenue Bulletins can be accessed at
www.irs.gov/irb. The fees for 2017 are
in Internal Revenue Bulletin 2017-1.
Payment of the user fee (check or
money order made payable to the
Internal Revenue Service) must be
attached to Form 1128 at the time the
form is filed. Payment may also be
made through www.pay.gov. See
Rev. Proc. 2017-1 (or any successor)
for more information.

Section B—Corporations
(Other Than S Corporations
and Controlled Foreign
Corporations)

Corporations must complete this
section and any other section in Part
III that applies to that particular entity.
For example, a Passive Foreign

Investment Company (PFIC)
completes Section B and attaches the
statement required by Section H.
Complete Sections B and F for a
tax-exempt organization that is a
corporation.
Note. In addition to excluding CFC(s)
from Section B, 10/50 corporations
are also excluded.

Section C—S Corporations

An S corporation must have a
permitted tax year unless it has
elected under section 444 to have a
tax year other than the required tax
year. A “permitted tax year” is:
1. A tax year that ends on
December 31, or
2. Any other tax year if the
corporation can establish a business
purpose to the satisfaction of the IRS.
For purposes of 2, above, any
deferral of income to shareholders will
not be treated as a business purpose.
For more information, see Rev. Proc.
2006-46 and Rev. Proc. 2002–39.
If any shareholder is applying for a
corresponding change in tax year,
that shareholder must file a separate
Form 1128 to get advance approval to
change its tax year.

Section D—Partnerships

A partnership must obtain advance
approval from the IRS to adopt,
change, or retain a tax year unless it is
not required to file Form 1128, or it
meets one of the automatic approval
rules discussed earlier in the
instructions for Part II, Section B. Also
see the exceptions for partnerships
under Who Must File, earlier.
Partners must also get separate
advance approval to change their tax
years.

Line 23. Enter the first date a
business transaction resulted in a tax
consequence, such as receiving
income or incurring an expense.

Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal
Revenue laws of the United States. Section 442 says that you must obtain IRS approval if you want to adopt, change, or
retain a tax year. To obtain approval, you must file an application to adopt, change, or retain a tax year. Sections 6001,
6011, 6012(a), and 6109 and their regulations require you to provide the requested information. Failure to provide this
information in a timely manner could delay processing or could result in denial of your application. Providing false
information could subject you to penalties.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be
retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by section 6103.
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However, section 6103 allows or requires the Internal Revenue Service to disclose or give the information shown on
your application to others as described in the Code. For example, we may disclose your tax information to the
Department of Justice to enforce the tax laws, both civil and criminal, and to cities, states, the District of Columbia, U.S.
commonwealths or possessions, and certain foreign governments to carry out their laws. We may also disclose this
information to federal and state agencies to enforce federal nontax criminal laws and to combat terrorism.
Keep this notice with your records. It may help you if we ask you for other information. If you have any questions about
the rules for filing and giving information, call or visit any Internal Revenue Service office.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden
for individual taxpayers filing this form is approved under OMB control number 1545-0074 and is included in the
estimates shown in the instructions for their individual income tax return. The estimated burden for all other taxpayers
who file this form is shown below.

Recordkeeping

Learning about the
law or the form

Preparing
and sending
the form to
the IRS

Parts I and II

8 hr., 36 min.

5 hr., 51 min.

6 hr., 15 min.

Parts I and III

22 hr., 14 min.

5 hr., 37 min.

7 hr., 26 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler,
we would be happy to hear from you. You can send us comments through IRS.gov/FormComments. Or you can write to
Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526, Washington, DC
20224. Do not send the tax form to this office. Instead, see Where To File, earlier.

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