Scenario 6 - Accounting Periods (SVC Corporation)

SVC Corp. is a new personal services corporation (PSC) that performs engineering services. It has been exploring its options regarding adopting a tax year. It started operations on June 1, 2022. What are the requirements for adoption of SVC's tax year?

a) It can establish any tax year by submitting a tax return using that tax year.

b) It can establish any tax year by submitting a letter to the IRS requesting that tax year.

c) It will generally be required to use a calendar year tax year.

d) It may establish a tax year by submitting Form 1128 to the IRS.

Assume that in the situation above with SVC corporation that the company wishes to make a Section 444 election. What will be the effect of a Section 444 election, and what is SVC required to do in order to make this election?

a) Change in accounting method. SVC must submit Form 8716 to the IRS.

b) Adoption of a tax year other than the calendar year. SVC must submit Form 1128 to the

IRS.

c) Adoption of a tax year other than the calendar year. SVC must submit Form 8752 to the

IRS.

d) Adoption of a tax year other than the calendar year. SVC must submit Form 8716 to the

IRS.

Assume that SVC corporation still wants to make a Section 444 election, but the company is an S corporation instead of a PSC. What will be the effect of a Section 444 election, and what is SVC required to do in order to make this election?

a) SVC is only required to submit Form 8716 to the IRS.

b) SVC is required to submit Form 8716 and Form 8752 to the IRS.

c) SVC is only required to submit Form 1128 to the IRS.

d) SVC is required to submit Form 1128 and Form 8752 to the IRS.