26 U.S.C. § 444 — Election of taxable year other than required taxable year

(a) General rule -- Except as this section otherwise provides, a partnership, S corporation, or personal service corporation may elect to have a tax year other than the "required taxable year." (b) Limitations on taxable years which may be elected (1) In general -- Except as (2) and (3) allow, an election under (a) can only be made if the deferral period of the elected tax year is no more than 3 months. (2) Changes in taxable year -- Except as (3) allows, when an entity is changing its tax year, it can elect under (a) only if the deferral period is no longer than the shorter of: (A) 3 months, or (B) the deferral period of the tax year being changed. (3) Special rule for entities retaining 1986 taxable years -- For an entity's first tax year beginning after December 31, 1986, the entity may elect a tax year matching its last tax year that began in 1986. (4) Deferral period -- Except as regulations provide, this means the months between the start of the elected tax year and the end of the first "required taxable year" that ends within it. (c) Effect of election -- If an entity elects under (a): (1) a partnership or S corporation must make the payments required by section 7519, and (2) a personal service corporation is subject to the deduction limits of section 280H. (d) Elections (1) Person making election -- the partnership, S corporation, or personal service corporation itself makes the election. (2) Period of election (A) In general -- the election stays in effect until the entity changes its tax year or otherwise ends the election. It can switch to a required tax year without the Secretary's consent. (B) No further election -- once an election ends under (A) or under (3)(A) below, the entity may not make another election under (a). (3) Tiered structures, etc. (A) In general -- Except as this paragraph provides: (i) no entity that's part of a "tiered structure" may elect under (a), and (ii) if an entity already has an election and then becomes part of a tiered structure, the election ends. (B) Exceptions for structures consisting of certain entities with same taxable year -- (A) doesn't apply to a tiered structure made up only of partnerships or S corporations (or both) that all share the same tax year. (e) Required taxable year -- This means the tax year figured under section 706(b), 1378, or 441(i), without considering any tax year allowed for business-purpose reasons. For this sentence only, those sections are treated as if they were in effect for tax years beginning before January 1, 1987. (f) Personal service corporation -- has the meaning given in section 441(i)(2). (g) Regulations -- The Secretary must prescribe regulations needed to carry out this section, including rules to stop people from avoiding (b)(2)(B) or (d)(2)(B) by changing an entity's form.