Port Corporation wants to change its tax year from a calendar year to a fiscal year ending June 30. Port is a C Corporation owned by 100 shareholders, none of whom own more than 5% of the stock.
Can Port change its tax year? If so, how can it accomplish the change?

Yes, it can.

Explanation:

According to Internal Revenue Service (IRS) a calendar year is a period that runs from January 1 to December 31, while a fiscal year is obtained when final day of any consecutive 12-month period is in December but the final day of any other month.

A company can change its tax year from either of fiscal or calendar year to either of the two under two circumstances as follows:

1. Without a prior approval of IRS: All the requirements for changing in a tax year are stated by the IRS in Rev. Proc. 2006-46 and 2006-2 C.B. 859 which are stated on page C:3-4 of the IRS text. If Port Corporation meets these requirements, does not need a prior approval of the IRS.

2.Getting a prior approval of IRS: If Port Corporation does not meet the requirements as stated in (1) above, it can still change its tax year with it will be after getting the approval of the IRS. What it needs to do to get the approval is to fill the Form 1128. The condition that this has to be done on or before the fifteenth day of the third month following the close of the short period resulting from the change.

I wish you the best.

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total