[Code of Federal Regulations]
[Title 26, Volume 13]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR]

[Page 461]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Procedure and Administration--Table of Contents
 
Sec.  1.6654-3  Short taxable years of individuals.

    (a) In general. The provisions of section 6654, with certain 
modifications relating to the application of subsection (d) thereof, 
which are explained in paragraph (b) of this section, are applicable in 
the case of a short taxable year for which a declaration is required to 
be filed. (See Sec.  1.6015(g)-1 for requirement of declaration for 
short taxable year.)
    (b) Rules as to application of section 6654(d). (1) In any case in 
which the taxable year for which an underpayment of estimated tax exists 
is a short taxable year due to a change in annual accounting periods, in 
determining the tax:
    (i) Shown on the return for the preceding taxable year (for purposes 
of section 6654(d)(1)), or
    (ii) Based on the personal exemptions and rates for the current 
taxable year but otherwise on the basis of the facts shown on the return 
for the preceding taxable year, and the law applicable to such year (for 
purposes of section 6654(d)(4)),

the tax will be reduced by multiplying it by the number of months in the 
short taxable year and dividing the resulting amount by 12.
    (2) If the taxable year for which an underpayment of estimated tax 
exists is a short taxable year due to a change in annual accounting 
periods, in annualizing the taxable income for the months in the taxable 
year preceding an installment date, for purposes of section 
6654(d)(1)(C), the personal exemptions allowed as deductions under 
section 151 shall be reduced to the same extent that they are reduced 
under section 443(c) in computing the tax for a short taxable year.
    (3) If ``the preceding taxable year'' referred to in section 
6654(d)(4) was a short taxable year, for purposes of determining the 
applicability of the exception described in section 6654(d)(4), the tax, 
computed on the basis in the facts shown on the return for the preceding 
year, shall be the tax computed on the annual basis in the manner 
described in section 443(b)(1) (prior to its reduction in the manner 
described in the last sentence thereof). If the tax rates or the 
taxpayer's status with respect to personal exemptions for the taxable 
year with respect to which the underpayment occurs differ from such 
rates or status applicable to the preceding taxable year, the tax 
determined in accordance with this subparagraph shall be recomputed to 
reflect the rates and status applicable to the year with respect to 
which the underpayment occurs.

[T.D. 6500, 25 FR 12149, Nov. 26, 1960, as amended by T.D. 7427, 41 FR 
34033, Aug. 12, 1976]