# 26 U.S.C. § 1378: Taxable year of S corporation

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s1378>. Cite pinpoints as 26 U.S.C. § 1378(a)(1).

## § 1378(a) General rule

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

## § 1378(b) Permitted year defined

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

**§ 1378(b)(1)** is a year ending December 31, or

**§ 1378(b)(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.

## Regulations

- [Treas. Reg. § 1.1378-1](/26/reg/1.1378-1.md): Taxable year of S corporation. (interprets § 1378)

## Forms named in the regulations

- [Form 2553](https://www.irs.gov/pub/irs-pdf/f2553.pdf)

## Final rules

- [67 FR 35009](https://www.federalregister.gov/documents/2002/05/17/02-12169/changes-in-accounting-periods) (2002): Changes in Accounting Periods

## Leading cases

- [Farmers Gin v. Commissioner, T.C. Memo. 1995-25](https://www.courtlistener.com/opinion/4810390/farmers-gin-v-commissioner/)

## Connections

Cites: none

Cited by: § 706 Taxable years of partner and partnership

## Prior provisions

- A prior section 1378, added Pub. L. 89–389, § 2(a), Apr. 14, 1966, 80 Stat. 113; amended Pub. L. 91–172, title V, § 511(c)(4), Dec. 30, 1969, 83 Stat. 638; Pub. L. 94–455, title XIX, § 1901(a)(152), (b)(33)(R), Oct. 4, 1976, 90 Stat. 1789, 1802, related to tax imposed on certain capital gains, prior to the general revision of this subchapter by section 2 of Pub. L. 97–354.

## Amendments

- 1982-10-19: [Pub. L. 97-354](/26/act/97-354.md), 96 Stat. 1685
- 1984-07-18: [Pub. L. 98-369](/26/act/98-369.md), 98 Stat. 969
- 1986-10-22: [Pub. L. 99-514](/26/act/99-514.md), 100 Stat. 2363