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a business must use a calendar tax year if the business

a business must use a calendar tax year if the business

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A Calender refers to a period of 12 consecutive months beginning from January 1st and ending on December 31st. Whereas, A Fiscal year refers to the period of 12 consecutive months ending on the last day of any month except December.In other words, A Fiscal year refers to the period of 12 consecutive months that doesn't begin on January 1st or end on December 31st.

Although any business can use a calendar year as its tax year. However, a business must use a calendar tax year in any of the following given cases.

1. When a business does not maintain accounting records or books.

2. When a business does not have a annual accounting period.

3. When the present tax year of the business does not qualify as a fiscal year.

4. When the business is required to use a calendar year as its tax year under the provision of Income Tax Regulations and Internal Revenue Code. Such as in case of Sole proprietorship business.

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