[Code of Federal Regulations] [Title 26, Volume 6] [Revised as of April 1, 2004] From the U.S. Government Printing Office via GPO Access [CITE: 26CFR1.441-0] [Page 5-9] TITLE 26--INTERNAL REVENUE CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY (CONTINUED) PART 1_INCOME TAXES--Table of Contents Sec. 1.441-0 Table of contents. Normal Taxes and Surtaxes DEFERRED COMPENSATION, ETC. ACCOUNTING PERIODS AND METHODS OF ACCOUNTING Accounting Periods Sec. 1.441-0 Table of contents. 1.441-1 Period for computation of taxable income. 1.441-2 Election of taxable year consisting of 52-53 weeks. 1.441-3 Taxable year of a personal service corporation. 1.441-4 Effective date. 1.442-1 Change of annual accounting period. 1.443-1 Returns for periods of less than 12 months. 1.444-0T Table of contents (temporary). 1.444-1T Election to use a taxable year other than the required taxable year (temporary). 1.444-2T Tiered structure (temporary). 1.444-3T Manner and time of making section 444 election (temporary). 1.444-4 Tiered structure. Methods of Accounting Methods of Accounting in General 1.446-1 General rule for methods of accounting. 1.446-1T General rule for methods of accounting (temporary). 1.446-2 Method of accounting for interest. 1.446-3 Notional principal contracts. 1.446-4 Hedging transactions. 1.446-5 Debt issuance costs. 1.448-1 Limitation on the use of the cash receipts and disbursements method of accounting. 1.448-1T Limitation on the use of the cash receipts and disbursements method of accounting (temporary). 1.448-2T Nonaccrual of certain amounts by service providers (temporary). Taxable Year for Which Items of Gross Income Included 1.451-1 General rule for taxable year of inclusion. 1.451-2 Constructive receipt of income. 1.451-4 Accounting for redemption of trading stamps and coupons. 1.451-5 Advance payments for goods and long-term contracts. 1.451-6 Election to include crop insurance proceeds in gross income in the taxable year following the taxable year of destruction or damage. 1.451-7 Election relating to livestock sold on account of drought. 1.453-1--1.453-2 [Reserved] 1.453-3 Purchaser evidences of indebtedness payable on demand or readily tradable. 1.453-4 Sale of real property involving deferred periodic payments. 1.453-5 Sale of real property treated on installment method. 1.453-6 Deferred payment sale of real property not on installment method. 1.453-7--1.453-8 [Reserved] 1.453-9 Gain or loss on disposition of installment obligations. 1.453-10 Effective date. 1.453-11 Installment obligations received from a liquidating corporation. 1.453-12 Allocation of unrecaptured section 1250 gain reported on the installment method. 1.453A-0 Table of contents. 1.453A-1 Installment method of reporting income by dealers on personal property. 1.453A-2 Treatment of revolving credit plans; taxable years beginning on or before December 31, 1986. 1.453A-3 Requirements for adoption of or change to installment method by dealers in personal property. 1.454-1 Obligations issued at discount. 1.455-1 Treatment of prepaid subscription income. 1.455-2 Scope of election under section 455. 1.455-3 Method of allocation. 1.455-4 Cessation of taxpayer's liability. 1.455-5 Definitions and other rules. 1.455-6 Time and manner of making election. 1.456-1 Treatment of prepaid dues income. 1.456-2 Scope of election under section 456. 1.456-3 Method of allocation. 1.456-4 Cessation of liability or existence. 1.456-5 Definitions and other rules. 1.456-6 Time and manner of making election. 1.456-7 Transitional rule. 1.457-1 General overviews of section 457. 1.457-2 Definitions. 1.457-3 General introduction to eligible plans. 1.457-4 Annual deferrals, deferral limitations, and deferral agreements under eligible plans. 1.457-5 Individual limitation for combined annual deferrals under multiple eligible plans. 1.457-6 Timing of distributions under eligible plans. 1.457-7 Taxation of Distribution Under Eligible Plans. 1.457-8 Funding rules for eligible plans. [[Page 6]] 1.457-9 Effect on eligible plans when not administered in accordance with eligibility requirements. 1.457-10 Miscellaneous provisions. 1.457-11 Tax treatment of participants if plan is not an eligible plan. 1.457-12 Effective dates. 1.458-1 Exclusion for certain returned magazines, paperbacks, or records. 1.458-2 Manner of and time for making election. 1.460-0 Outline of regulations under section 460. 1.460-1 Long-term contracts. 1.460-2 Long-term manufacturing contracts. 1.460-3 Long-term construction contracts. 1.460-4 Methods of accounting for long-term contracts. 1.460-5 Cost allocation rules. 1.460-6 Look-back method. Taxable Year for Which Deductions Taken 1.461-0 Table of contents. 1.461-1 General rule for taxable year of deduction. 1.461-2 Contested liabilities. 1.461-2T Contested liabilities (temporary). 1.461-3 Prepaid interest. [Reserved] 1.461-4 Economic performance. 1.461-5 Recurring item exception. 1.461-6 Economic performance when certain liabilities are assigned or are extinguished by the establishment of a fund. 1.463-1T Transitional rule for vested accrued vacation pay (temporary). 1.465-1T Aggregation of certain activities (temporary). 1.465-27 Qualified nonrecourse financing. 1.466-1 Method of accounting for the redemption cost of qualified discount coupons. 1.466-2 Special protective election for certain taxpayers. 1.466-3 Manner of and time for making election under section 466. 1.466-4 Manner of and time for making election under section 373(c) of the Revenue Act of 1978. 1.467-0 Table of contents. 1.467-1 Treatment of lessors and lessees generally. 1.467-2 Rent accrual for section 467 rental agreements without adequate interest. 1.467-3 Disqualified leasebacks and long-term agreements. 1.467-4 Section 467 loan. 1.467-5 Section 467 rental agreements with variable interest. 1.467-6 Section 467 rental agreements with contingent payments. [Reserved] 1.467-7 Section 467 recapture and other rules relating to dispositions and modifications. 1.467-8 Automatic consent to change to constant rental accrual for certain rental agreements. 1.467-9 Effective dates and automatic method changes for certain agreements. 1.468A-0 Nuclear decommissioning costs; table of contents. 1.468A-1 Nuclear decommissioning costs; general rules. 1.468A-2 Treatment of electing taxpayer. 1.468A-3 Ruling amount. 1.468A-4 Treatment of nuclear decommissioning fund. 1.468A-5 Nuclear decommissioning fund qualification requirements; prohibitions against self-dealing; disqualification of nuclear decommissioning fund; termination of fund upon substantial completion of decommissioning. 1.468A-6 Disposition of an interest in a nuclear power plant. 1.468A-7 Manner of and time for making election. 1.468A-8 Effective date and transitional rules. 1.468B Designated settlement funds. 1.468B-0 Table of contents. 1.468B-1 Qualified settlement funds. 1.468B-2 Taxation of qualified settlement funds and related administrative requirements. 1.468B-3 Rules applicable to the transferor. 1.468B-4 Taxability of distributions to claimants. 1.468B-5 Effective dates and transition rules. 1.469-0 Table of contents. 1.469-1 General rules. 1.469-1T General rules (temporary). 1.469-2 Passive activity loss. 1.469-2T Passive activity loss (temporary). 1.469-3 Passive activity credit. 1.469-3T Passive activity credit (temporary). 1.469-4 Definition of activity. 1.469-4T Definition of activity (temporary). 1.469-5 Material participation. 1.469-5T Material participation (temporary). 1.469-6 Treatment of losses upon certain dispositions. [Reserved] 1.469-7 Treatment of self-charged items of interest income and deduction. 1.469-8 Application of section 469 to trust, estates, and their beneficiaries. [Reserved] 1.469-9 Rules for certain rental real estate activities. 1.469-10 Application of section 469 to publicly traded partnerships. 1.469-11 Effective date and transition rules. Inventories 1.471-1 Need for inventories. 1.471-2 Valuation of inventories. 1.471-3 Inventories at cost. 1.471-4 Inventories at cost or market, whichever is lower. 1.471-5 Inventories by dealers in securities. [[Page 7]] 1.471-6 Inventories of livestock raisers and other farmers. 1.471-7 Inventories of miners and manufacturers. 1.471-8 Inventories of retail merchants. 1.471-9 Inventories of acquiring corporations. 1.471-10 Applicability of long-term contract methods. 1.471-11 Inventories of manufacturers. 1.472-1 Last-in, first-out inventories. 1.472-2 Requirements incident to adoption and use of LIFO inventory method. 1.472-3 Time and manner of making election. 1.472-4 Adjustments to be made by taxpayer. 1.472-5 Revocation of election. 1.472-6 Change from LIFO inventory method. 1.472-7 Inventories of acquiring corporations. 1.472-8 Dollar-value method of pricing LIFO inventories. 1.475-0 Table of contents. 1.475(a)-1--1.475(a)-2 [Reserved] 1.475(a)-3 Acquisition by a dealer of a security with a substituted basis. 1.475(b)-1 Scope of exemptions from mark-to-market requirement. 1.475(b)-2 Exemptions--identification requirements. 1.475(b)-3 [Reserved] 1.475(b)-4 Exemptions--transitional issues. 1.475(c)-1 Definitions--dealer in securities. 1.475(c)-2 Definitions--security. 1.475(d)-1 Character of gain or loss. 1.475(e)-1 Effective dates. Adjustments 1.481-1 Adjustments in general. 1.481-2 Limitation on tax. 1.481-3 Adjustments attributable to pre-1954 years where change was not initiated by taxpayer. 1.481-4 Adjustments taken into account with consent. 1.481-5 Effective dates. 1.482-0 Outline of regulations under 482. 1.482-1 Allocation of income and deductions among taxpayers. 1.482-2 Determination of taxable income in specific situations. 1.482-3 Methods to determine taxable income in connection with a transfer of tangible property. 1.482-4 Methods to determine taxable income in connection with a transfer of intangible property. 1.482-5 Comparable profits method. 1.482-6 Profit split method. 1.482-7 Sharing of costs. 1.482-8 Examples of the best method rule. 1.483-1 Interest on certain deferred payments. 1.483-2 Unstated interest. 1.483-3 Test rate of interest applicable to a contract. 1.483-4 Contingent payments. Regulations Applicable for Taxable Years Beginning on or Before April 21, 1993 1.482-1A Allocation of income and deductions among taxpayers. 1.482-2A Determination of taxable income in specific situations. Authority: 26 U.S.C. 7805. Section 1.441-2T also issued under 26 U.S.C. 441(f). Section 1.441-3T also issued under 26 U.S.C. 441. Section 1.442-2T and 1.442-3T also issued under 26 U.S.C. 422, 706, and 1378. Section 1.444-0T through 1.444-3T and Section 1.444-4 is also issued under 26 U.S.C. 444(g).. Section 1.446-1 also issued under 26 U.S.C. 446 and 461(h). Section 1.446-4 also issued under 26 U.S.C. 1502. Section 1.451-5 also issued under 96 Stat. 324, 493. Section 1.453-11 also issued under 26 U.S.C. 453(j)(1) and (k). Section 1.453A-3 also issued under 26 U.S.C. 453A. Section 1.458-1 also issued under 26 U.S.C. 458. Section 1.460-1 also issued under 26 U.S.C. 460(h). Section 1.460-2 also issued under 26 U.S.C. 460(h). Section 1.460-3 also issued under 26 U.S.C. 460(h). Section 1.460-4 also issued under 26 U.S.C. 460(h) and 1502. Section 1.460-5 also issued under 26 U.S.C. 460(h). Section 1.460-6 also issued under 26 U.S.C. 460(h). Section 1.461-1 also issued under 26 U.S.C. 461(h). Section 1.461-2 also issued under 26 U.S.C. 461(h). Section 1.461-4 also issued under 26 U.S.C. 461(h). Section 1.461-4(d) also issued under 26 U.S.C. 460 and 26 U.S.C. 461(h). Section 1.461-5 also issued under 26 U.S.C. 461(h). Section 1.461-6 also issued under 26 U.S.C. 461(h). Section 1.465-27 also issued under 26 U.S.C. 465(b)(6)(B)(iii). Section 1.466-1 through 1.466-4 also issued under 26 U.S.C. 466. Section 1.467-1 is also issued under 26 U.S.C. 467. Section 1.467-2 is also issued under 26 U.S.C. 467. [[Page 8]] Section 1.467-3 is also issued under 26 U.S.C. 467. Section 1.467-4 is also issued under 26 U.S.C. 467. Section 1.467-5 is also issued under 26 U.S.C. 467. Section 1.467-6 is also issued under 26 U.S.C. 467. Section 1.467-7 is also issued under 26 U.S.C. 467. Section 1.467-8 is also issued under 26 U.S.C. 467. Section 1.467-9 is also issued under 26 U.S.C. 467. Section 1.468A-5 also issued under 26 U.S.C. 468A(e)(5). Section 1.468B also issued under 26 U.S.C. 461(h) and 468B. Section 1.468B-0 through 1.468B-5 also issued under 26 U.S.C. 461(h) and 468B. Section 1.469-1 also issued under 26 U.S.C. 469. Section 1.469-1T also issued under 26 U.S.C. 469. Section 1.469-2 also issued under 26 U.S.C. 469(l). Section 1.469-2T also issued under 26 U.S.C. 469(l). Section 1.469-3 also issued under 26 U.S.C. 469(l). Section 1.469-3T also issued under 26 U.S.C. 469(l). Section 1.469-4 also issued under 26 U.S.C. 469(l). Section 1.469-5 also issued under 26 U.S.C. 469(l). Section 1.469-5T also issued under 26 U.S.C. 469(l). Section 1.469-7 also issued under 26 U.S.C. 469(l). Section 1.469-9 also issued under 26 U.S.C. 469(c)(6), (h)(2), and (l)(1). Section 1.469-11 also issued under 26 U.S.C. 469(l). Section 1.471 also issued under 26 U.S.C. 471. Section 1.471-4 also issued under 26 U.S.C. 263A. Section 1.471-5 also issued under 26 U.S.C. 263A. Section 1.471-6 also issued under 26 U.S.C. 471. Section 1.472-8 also issued under 26 U.S.C. 472. Section 1.475(a)-3 also issued under 26 U.S.C. 475(e). Section 1.475(b)-1 also issued under 26 U.S.C. 475(b)(4) and 26 U.S.C. 475(e). Section 1.475(b)-2 also issued under 26 U.S.C. 475(b)(2) and 26 U.S.C. 475(e). Section 1.475(b)-4 also issued under 26 U.S.C. 475(b)(2), 26 U.S.C. 475(e), and 26 U.S.C. 6001. Section 1.475(c)-1 also issued under 26 U.S.C. 475(e). Section 1.475(c)-2 also issued under 26 U.S.C. 475(e) and 26 U.S.C. 860G(e). Section 1.475(d)-1 also issued under 26 U.S.C. 475(e). Section 1.475(e)-1 also issued under 26 U.S.C. 475(e). Section 1.481-1 also issued under 26 U.S.C. 481. Section 1.481-2 also issued under 26 U.S.C. 481. Section 1.481-3 also issued under 26 U.S.C. 481. Section 1.481-4 also issued under 26 U.S.C. 481. Section 1.481-5 also issued under 26 U.S.C. 481. Section 1.482-1 also issued under 26 U.S.C. 482 and 936. Section 1.482-2 also issued under 26 U.S.C. 482. Section 1.482-3 also issued under 26 U.S.C. 482. Section 1.482-4 also issued under 26 U.S.C. 482. Section 1.482-5 also issued under 26 U.S.C. 482. Section 1.482-7 is also issued under 26 U.S.C. 482. Section 1.482-2A also issued under 26 U.S.C. 482. Section 1.483-1 through 1.483-3 also issued under 26 U.S.C. 483(f). Section 1.483-4 also issued under 26 U.S.C. 483(f). DEFERRED COMPENSATION, ETC. (CONTINUED) ACCOUNTING PERIODS AND METHODS OF ACCOUNTING Accounting Periods This section lists the captions contained in Sec. Sec. 1.441-1 through 1.441-4 as follows: Sec. 1.441-1 Period for computation of taxable income. (a) Computation of taxable income. (1) In general. (2) Length of taxable year. (b) General rules and definitions. (1) Taxable year. (1) Required taxable year. (i) In general. (ii) Exceptions. (A) 52-53-week taxable years. (B) Partnerships, S corporations, and PSCs. (C) Specified foreign corporations. (3) Annual accounting period. (4) Calendar year. (5) Fiscal year. (i) Definition. (ii) Recognition. (6) Grandfathered fiscal year. [[Page 9]] (7) Books. (8) Taxpayer. (c) Adoption of taxable year. (1) In general. (2) Approval required. (i) Taxpayers with required taxable years. (ii) Taxpayers without books. (d) Retention of taxable year. (e) Change of taxable year. (f) Obtaining approval of the Commissioner or making a section 444 election. Sec. 1.441-2 Election of taxable year consisting of 52-53 weeks (a) In general. (1) Election. (2) Effect. (3) Eligible taxpayer. (4) Example. (b) Procedures to elect a 52-53-week taxable year. (1) Adoption of a 52-53-week taxable year. (i) In general. (ii) Filing requirement. (2) Change to (or from) a 52-53-week taxable year. (i) In general. (ii) Special rules for short period required to effect the change. (3) Examples. (c) Application of effective dates. (1) In general. (2) Examples. (3) Changes in tax rates. (4) Examples. (d) Computation of taxable income. (e) Treatment of taxable years ending with reference to the same calendar month. (1) Pass-through entities. (2) Personal service corporations and employee-owners. (3) Definitions. (i) Pass-through entity. (ii) Owner of a pass-through entity. (4) Examples. (5) Transition rule. Sec. 1.441-3 Taxable year of a personal service corporation (a) Taxable year. (1) Required taxable year. (2) Exceptions. (b) Adoption, change, or retention of taxable year. (1) Adoption of taxable year. (2) Change in taxable year. (3) Retention of taxable year. (4) Procedures for obtaining approval or making a section 444 election. (5) Examples. (c) Personal service corporation defined. (1) In general. (2) Testing period. (i) In general. (ii) New corporations. (3) Examples. (d) Performance of personal services. (1) Activities described in section 448(d)(2)(A). (2) Activities not described in section 448(d)(2)(A). (e) Principal activity. (1) General rule. (2) Compensation cost. (i) Amounts included. (ii) Amounts excluded. (3) Attribution of compensation cost to personal service activity. (i) Employees involved only in the performance of personal services. (ii) Employees involved only in activities that are not treated as the performance of personal services. (iii) Other employees. (A) Compensation cost attributable to personal service activity. (B) Compensation cost not attributable to personal service activity. (f) Services substantially performed by employee-owners. (1) General rule. (2) Compensation cost attributable to personal services. (3) Examples. (g) Employee-owner defined. (1) General rule. (2) Special rule for independent contractors who are owners. (h) Special rules for affiliated groups filing consolidated returns. (1) In general. (2) Examples. Sec. 1.441-4 Effective date [T.D. 8996, 67 FR 35012, May 17, 2002]