California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 3.5 - Bank and Corporation Tax › Subchapter 13 - Accounting Periods and Methods of Accounting › Article 1 - Accounting Periods › Section 24636 - Computation of Tax for Short Period on Change of Annual Accounting Period

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) General Rule.
(1) If a return is made for a short period,
					 the net income for the short period shall be placed on an annual basis by
					 multiplying such income by 12 and dividing the result by the number of months
					 in the short period. Unless Section
					 24636(b) and
					 subsection (b) of this regulation apply, the tax for the short period shall be
					 the same part of the tax computed on the annual basis as the number of months
					 in the short period is of 12 months.
(2) If a return is made for a short period of
					 more than 6 days, but less than 359 days, resulting from a change from or to a
					 52-53 week income year, the net income for the short period shall be annualized
					 and the tax computed on a daily basis, as provided in Section
					 24631(f) (2) (B)
					 (iii) and subsection (3) (E) of Reg. 24631
					 (b).
(3) In the case of the offset
					 provided for in Article 3 of Chapter 2, the Franchise Tax Board shall compute
					 the amount of tax on the income placed on an annual basis, and shall allow the
					 offset provided for from such tax. The tax due under Section
					 24636, which shall not be subject
					 to offset, shall be such part of the tax, less the offset allowed, computed on
					 such annual basis as the number of months in the short period of 12
					 months.
(4) The provisions of
					 subsection (a) (3) may be illustrated by the following example:
EXAMPLE.
The X Financial Corporation makes a return for the
						one-month period ending September 30, 1969, because of a change in annual
						accounting period permitted under Section
						24633. Income and expenses for the
						short period are as follows:
Gross operating
								income.................................................................................................................................
..........................$133,900
Business
								expenses.........................................................................................................................................
..........................
130,000
Net income from
								operations...........................................................................................................................
..........................
$3,900
Net income for short period before
								annualizing...........................................................................................
..........................$3,900
Net income annualized ($3,900 x
								12)...........................................................................................................
..........................
$46,800
Tax on annual basis: $46,800 at 11
								percent................................................................................................
..........................$5,148
Financial corporation offset (Section
								23184)...............................................................................................
..........................
348
Net
								tax..........................
..........................
$4,800
Tax for one-month period ($4,800 x 
								1/12
								)..........................
..........................$400