52-53 week year

[Snaggletooth]

The IRS allows the election of a fiscal year always ending on a particular day of the week. For example, Gertie Corp may elect to end its year on the last Saturday of the December.
I believe this is revocable only with IRS consent.

Assume this to be the case, and Gertie's end date for 2009 would have been December 26th, 2009.

Now, get into IRS regs, where certain limitations are placed on years that begin or end. There are dozens of such regs, and you've seen 'em.

Let's say the IRS has a reg which prohibits a tax credit "for years beginning AFTER December 31, 2009." What is Gertie's status?

1. Gertie's next fiscal year actually begins on December 27th, so Gertie would qualify for the credit.
2. Gertie's 52-53 week election is for convenience only, thus any reg written with the obvious intent of cutting off at year-end is interpreted to apply to 52-53 wk taxpayers. Thus Gertie cannot qualify for the credit.

[Corduroy Frog]

Bump Up

Going to bump this one up to give you tax gurus the golden opportunity to think about it once again. Hard to know where to research something like this.

[JohnH]

Ron:

Would this be of some help?

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To determine an effective date (or apply provisions of any law) expressed in terms of tax years beginning, including, or ending on the first or last day of a specified calendar month, a 52-53-week tax year is considered to:
Begin on the first day of the calendar month beginning nearest to the first day of the 52-53-week tax year, and

End on the last day of the calendar month ending nearest to the last day of the 52-53-week tax year.


Example.

Assume a tax provision applies to tax years beginning on or after July 1, 2007, which happens to be a Sunday. For this purpose, a 52-53-week tax year that begins on the last Tuesday of June, which falls on June 26, 2007, is treated as beginning on July 1, 2007.
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Taken from Publication 538:

http://www.irs.gov/publications/p538/ar02.html

[Corduroy Frog]

Good Answer

John, good answer.

Apparently the 52-53 wk year is an accommodation to companies whose payroll cuts off on a certain day of the week, and allows the company to simplify accounting.

From the example given, it is appears this accommodation does NOT allow such a company to straddle years to avoid tax consequences by creating a "cusp period" to begin its year. It would be treated as beginning on the first day of the first fiscal month for these purposes.

[JohnH]

Thanks.
Once again, I've demonstrated the validity of the "blind hog" theory in action.