Connecticut Administrative Code › Title 12 - Taxation › 740(a) - INCOME TAX › Part XIII - Accounting periods and accounting methods › Section 12-708-8 - Change other than from accrual to installment method of accounting

Current through July 10, 2024
(a) If a person's method of accounting is
				changed, other than from an accrual to an installment method, there shall be
				taken into account in computing Connecticut taxable income from the taxable
				year of the change those adjustments pertaining to inventories, accounts
				receivable, accounts payable, etc., which are determined to be necessary to
				prevent amounts from being duplicated or omitted. If the change has occurred by
				reason of a change in the person's federal method of accounting, such
				adjustments shall generally be reflected in federal adjusted gross income and
				therefore in Connecticut adjusted gross income for the year of the change. The
				"year of the change" is the taxable year for which the taxable income of the
				person is computed under a method of accounting different from that used for
				the preceding year.
(b) The
				adjustments necessitated by reason of such change in accounting method may
				result in an amount of Connecticut income tax for the year of the change in
				excess of the Connecticut income tax which would have been determined had there
				not been such a change in the method of accounting. In such event, the
				additional Connecticut income tax shall not be greater than if such adjustments
				were ratably attributed to and included for the taxable year of the change and
				the preceding taxable years, not in excess of two, during which the person used
				the prior method of accounting.
(c)
				A statement shall be submitted with the Connecticut income tax return for the
				year of the change, setting forth the following information and calculations:
(1) each adjustment necessitated by the
				change;
(2) the net amount of the
				adjustments. This means the consolidation of the adjustments (whether the
				amounts thereof represent increases or decreases in items of income or
				deduction) arising with respect to balances in various accounts at the
				beginning of the taxable year of the change. Where the change in the method of
				accounting occurs by reason of a federal change, this net amount shall be the
				same for Connecticut income tax purposes as it is for federal income tax
				purposes, except to the extent of any modifications described in §§
										12-701(a)(20)-2
				and
				12-701(a)(20)-3
				of Part I and §§
										12-701(a)(10)-2
				and
				12-701(a)(10)-3
				of Part IV;
(3) the Connecticut
				income tax for the taxable year of the change with the net amount of
				adjustments included in the computation of Connecticut taxable
				income;
(4) the Connecticut income
				tax for the taxable year of the change computed as if the net amount of such
				adjustments were not included in the computation of Connecticut taxable
				income;
(5) the amount (but not
				less than zero) of any additional Connecticut income tax for the taxable year
				of the change, incurred solely by reason of the net amount of adjustments
				included in Connecticut taxable income, computed by subtracting the amount
				computed in subdivision (4) from the amount computed in subdivision (3) of this
				subsection;
(6) the allocation of
				the net amount of adjustments (subdivision (2) of this subsection) to the
				taxable year of the change and the preceding taxable year or years, not in
				excess of two, during which the person used the method of accounting from which
				the change is made. The amount to be allocated to each such year is determined
				by dividing the net amount of adjustments into as many equal parts as there are
				taxable years involved (either two or three taxable years, including the
				taxable year of the change);
(7)
				the Connecticut taxable income for the taxable year of the change and for the
				preceding taxable year(s), as the case may be, computed both (A) without any
				amount of the net adjustments, and (B) with the addition of the appropriate
				share of the net adjustments as determined under subdivision (6) of this
				subsection;
(8) the additional
				Connecticut income tax which would result for each of the above taxable years
				by the addition to the Connecticut taxable income in each such year of the
				appropriate share of the net adjustments; and
(9) the total amount of such additional
				Connecticut income tax for the years involved.