Rev. Rul. 55-10

SECTION 1. PURPOSE.

The purpose of this Revenue Ruling is to state the procedure to be followed, pending the issuance of regulations under the Internal Revenue Code of 1954 (hereinafter referred to as `the 1954 Code'), with respect to the approval by the Commissioner of Internal Revenue of changes of annual accounting periods where the new accounting period is subject to the provisions of the 1954 Code. Accordingly, the following rules apply to changes to 52-53-week taxable years ending after August 16, 1954, and to changes to other taxable years beginning after December 31, 1953, and ending after August 16, 1954. Section 4 states the special rules for partnerships and partners in the case of taxable years beginning after April 1, 1954.

SEC. 2. APPLICATION OF STOPGAP REGULATIONS.

In accordance with the provisions of stopgap regulations promulgated by T.D. 6091, C.B. 1954-2, 47, the provisions of section 39.46-1 of Regulations 118, as amended by T.D. 6099, C.B. 1954-2, 113, continue in effect, insofar as they are not inconsistent with the provisions of the 1954 Code, until they are superseded by regulations issued under the 1954 Code. For certain situtations with respect to which the 1954 Code contains new provisions not covered by or inconsistent with section 39.46-1 of Regulations 118, interim rules are set forth in the following sections of this Revenue Ruling. Such rules are temporary and will be superseded by regulations.

SEC. 3. CHANGES TO 52-53-WEEK TAXABLE YEARS.

.01 Section 441(f) of the 1954 Code authorizes a taxpayer to elect to compute his taxable income on the basis of an annual accounting period which varies from 52 to 53 weeks, always ends on the same day of the week and either (a) always ends on whatever date this same day of the week last occurs in a designated calendar month or (b) always ends on whatever date this same day of the week falls which is nearest to the last day of a designated calendar month.

.02 The election to compute taxable income on the basis of a 52-53-week taxable year may be made for taxable years ending after August 16, 1954, by taxpayers who regularly keep their books of account on that basis. A taxpayer will be considered to comply with this requirement if at the time he elects a 52-53-week taxable year he conforms his books to that basis and thereafter regularly keeps his books of account and reports his income on such basis.

.03 If a taxpayer has been reporting taxable income on the basis of a calendar year or a fiscal year ending on the last day of a calendar month, and elects to change to a 52-53-week taxable year ending on a particular day with reference to the end of the same month, advance approval of the change will not be required. For example, advance approval will not be required if a taxpayer who has been reporting his income on the basis of a taxable year ending on October 31, changes to a 52-53-week taxable year which will either always end on the last Saturday in October or will always end on the Saturday which is nearest to the last day of October. If, however, a change is made to a 52-53-week taxable year which ends with reference to the end of a month other than the month on the last day of which his prior taxable year ended, the rules referred to in section 2 or section 4, as the case may be, are applicable in determining whether advance approval is required. The election to change to a taxable year of 52-53-weeks shall be indicated by a statement attached to the return for the first taxable year to which such election is applicable. This statement shall furnish full details as to the time the new taxable year will end.

.04 For the purpose of determining the time for filing an application (where necessary) for approval of a change of annual accounting period and for filing the return for the short period required to effect a change to a 52-53 week taxable year, the short period shall be treated as ending with the last day of the month which ends nearest to the last day of such short period. For example, if the short period ends within the period from November 24, 1954, to December 3, 1954, inclusive, it shall be treated as ending November 30, 1954. See section 441(f)(2)(A) of the 1954 Code.

SEC. 4. PARTNERSHIPS AND PARTNERS.

.01 This section applies to changes by partnerships and partners to taxable years beginning after April 1, 1954 and to the adoption by a newly organized partnership of a taxable year beginning after that date. See section 771(b)(1) of the 1954 Code. The rules referred to in section 2 apply to changes to taxable years beginning before April 2, 1954, in determining whether advance approval is required.

.02 A partnership is required to obtain advance approval of a change to or the adoption of a taxable year which is different from that of any of its principal partners. Advance approval is not required where (a) a partnership changes to or adopts a taxable year which is the same as that of all its principal partners or (b) where a partnership and all its principal partners concurrently change to or adopt the same taxable year.

.03 For the purpose of this section a `principal partner' is a partner having an interest of 5 percent or more in partnership profits or capital.

.04 A partner is required to obtain advance approval of a change to a taxable year which is not the same as that of every partnership in which he is a principal partner. Unless required by section 39.46-1 of Regulations 118, advance approval is not necessary in the case of a partner who changes to a taxable year which is the same as that of every partnership in which he is a principal partner or which is the same as that to which every such partnership having a different taxable year concurrently changes. Unless required by section 39.46-1 of Regulations 118, advance approval is not necessary in the case of a change of taxable year by a partner's spouse who is not a principal partner in any partnership.

.05 The procedure for obtaining advance approval is the same as that prescribed in the regulations referred to in section 2. Where advance approval is required, permission to change to or to adopt the desired taxable year will be granted only if a business purpose therefor is established to the satisfaction of the Commissioner of Internal Revenue.

.06 Any newly formed partnership which adopts a taxable year with respect to which advance approval is not required shall file with its first return a statement to the effect that the taxable year which it is adopting is the same as that of all the principal partners, or that all the principal partners are concurrently changing to the taxable year which it is adopting. If partner or an existing partnership changes to a taxably year with respect to which advance approval is not required a similar statement shall be filed with the return for the short period resulting from the change of taxable year. In each such case the statement shall cite the authority for the change. Pending the issuance of regulations under a partner or an existing partnership Revenue Ruling constitutes such authority.

.07 If, without obtaining the approval of the Commissioner of Internal Revenue, a partner or partnership has changed to or adopted an annual accounting period beginning after April 1, 1954, and, under the foregoing provisions of this section, advance approval is required for the change or adoption, such annual accounting period will not be accepted as a taxable year until approval thereof is secured. Under these circumstances an application to change to or adopt the desired taxable year will be considered timely if filed within 30 days after the date of the Internal Revenue Bulletin in which this Revenue Ruling is published.