26 U.S.C. § 1378

Taxable year of S corporation

(a) General rule

For purposes of this subtitle, the taxable year of an S corporation shall be a permitted year.

(b) Permitted year defined

For purposes of this section, the term “permitted year” means a taxable year which—

(1)

is a year ending December 31, or

(2)

is any other accounting period for which the corporation establishes a business purpose to the satisfaction of the Secretary.

For purposes of paragraph (2), any deferral of income to shareholders shall not be treated as a business purpose.

(Added Pub. L. 97–354, § 2 , Oct. 19, 1982 , 96 Stat. 1685 ; amended Pub. L. 98–369, div. A, title VII, § 721(m) , (q), July 18, 1984 , 98 Stat. 969 , 970; Pub. L. 99–514, title VIII, § 806(b) , Oct. 22, 1986 , 100 Stat. 2363 .)