Have you ever noticed that the Internal Revenue Service’s regulations often are illogical?
For instance, I have a corporate client with a fiscal year end of March 31, 2013. I filed its Form 1120 for that year end. However, in May, it dissolved its corporation, and the IRS requires a short year Form 1120 to be filed two and one-half months following the month in which it dissolved, or by August 15, 2013. The instructions for Form 1120 read as follows:
A corporation that has dissolved must generally file by the 15th day of the 3rd month after the date it dissolved.
The problem is this: 2013 IRS tax forms, as well as my 2013 tax software, will not be available until the end of 2013. Duh?
Why doesn’t the IRS just require the filing at its normal year end dates instead of creating another quandary for tax professionals?
Of course, I will file an extension and file the return then; and there is the alternative of filing on 2012 forms and crossing out the years on the tax forms, but that might create more mayhem at the Internal Revenue Service.
Someone was kind enough to bring to my attention that in the instructions to Form 1120—not anywhere immediately near the instructions for “When to File” and hidden in a passage entitled, “Period Covered”—the instructions of what to do when a corporation has a tax year of less than 12 months that begins and ends in 2013, and the 2013 Form 1120 is not available at the time the corporation is required to file its return:
The corporation must show its 2013 tax year on the 2012 Form 1120 and take into account any tax law changes that are effective for tax years beginning after December 31, 2012.
The moral of this story is one has to read the entire instructions in an IRS publication before interpreting any statement of tax law in any tax regulation.