Accounting Periods
Annual accounting periods are 12-month periods which are used to compute taxable income, these periods are known as the taxable year.


Taxable year is measured for income tax purposes in one of two accounting periods:

1) Calendar Year – Most individuals and businesses use this method. It runs from Jan. 1 to Dec. 31.

2) Fiscal Year Used by some businesses and organizations to better reflect a natural year for their line of business. This cycle is a 12-month period that ends on the last day of any month, except December. (i.e. Nov. 1 to Oct. 31)

Restrictions:
  • In partnerships, all partners must use the same taxable year
  • S Corporations generally use calendar year
  • Taxpayers generally use calendar year, but fiscal year may be used if adequate records are maintained,
  • Once an accounting period is used, IRS consent must be obtained to change


Accounting Methods

Related Articles
  1. Taxes

    Ten Things That You Might Not Know Are Taxable

    When you file your taxes this year make sure that you have claimed all taxable income. Here are ten things that you might not know are taxable
  2. Taxes

    Explaining Taxable Income

    Taxable income is the net of gross income and allowable deductions.
  3. Retirement

    Not All Retirement Accounts Should Be Tax-Deferred

    It may be better to leave your assets exposed to the tax man when you're saving to retire.
  4. Retirement

    Avoid the Social Security Tax Trap

    Government benefits can cost you big money! Know the income thresholds before you file.
  5. Taxes

    5 Tax-Efficient Portfolio Tips for High Income Earners

    High income earners can use these tips to make their portfolio more tax-efficient.
  6. Taxes

    10 Sources of Nontaxable Income

    Taxes are often a deterrent from investing and saving. These financial practices will bring you no tax grief.
  7. Taxes

    Taxable Rewards To Be Aware Of

    Find which benefits from reward programs count as income in the eyes of the IRS.
  8. Financial Advisor

    Tips for Tax-Efficient Retirement Plan Withdrawals

    Here's how advisors can help increase tax efficiency for clients who are withdrawing assets from retirement accounts.
  9. Retirement

    Top Money-Saving Tax Strategies for Retirees

    Retirees that have a tax-efficient investing and distribution plan in place may be able to keep more of their hard-earned wealth.
  10. Financial Advisor

    How to Optimize Taxable Portfolios in Bear Markets

    A bear market presents an opportunity for financial advisors to optimize clients' taxable portfolios.
Frequently Asked Questions
  1. Who are Monsanto's main competitors?

    Learn about Monsanto Company's two main operating divisions and its main competitors within each sector, including The Mosaic ...
  2. What is an assumable mortgage?

    The purchase of a home is a very expensive undertaking and usually requires some form of financing to make the purchase possible. ...
  3. Do I have to complete all exams within a certain period of time to receive the CFA charter?

    According to the CFA Institute, a candidate can take as much time as necessary to complete all three levels of the CFA program.Therefore, ...
  4. What is a reasonable amount of debt?

    It really depends on numerous factors - what stage of life you are at, your spending and saving habits, the stability of ...
Trading Center