Accounting Periods

irs.gov -

Accounting Periods

For a decedent's estate, the moment of death determines the end of the decedent's tax year and the beginning of the estate's tax year. As executor or administrator, you choose the estate's tax period when you file its first income tax return. The estate's first tax year may be any period of 12 months or less that ends on the last day of a month. If you select the last day of any month other than December, you are adopting a fiscal tax year.

To change the accounting period of an estate, use Form 1128, Application To Adopt, Change, or Retain a Tax Year.

Generally, a trust must adopt a calendar year. The following trusts are exempt from this requirement:

  • A trust that is exempt from tax under section 501(a);

  • A charitable trust described in section 4947(a)(1); and

  • A trust that is treated as wholly owned by a grantor under the rules of sections 671 through 679.