Four-year income spread requires prompt evaluation

Accounting Today, November, 2003 by George G. Jones

The Internal Revenue Service recently announced an opportunity for some partners and S corporation shareholders to spread out income that is realized in any short year generated by certain accounting year changes by their S corporation or partnership. Unfortunately, this opportunity--in the form of Revenue Procedure 2003-79--allows the S corp or partnership a relatively short window of time within which to act.

Analysis of who benefits and what steps should be taken to maximize these benefits becomes especially appropriate as the end of the year approaches. Given that the most frequent year to which switching will be permitted under the new Rev. Proc. will be the regular calendar year, Dec. 31, 2003, becomes a pivotal date.

Ground rules

Rev. Proc....