U. S. Code Section 441: Period for Computation of Taxable Income

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U. S. Code Section 441: Period for Computation of Taxable Income


The computation of taxable income in the United States takes place during the taxable period. The respective period comprises the episodic basis within which the imposition of income tax occurs. The period of taxable income is an essential notion for the income tax framework. For palpable grounds, deductions and incomes are usually decided on a cyclic basis and distributed within fiscal periods, basis schedules, or tax years (Code of Federal Regulations 28). Income tax is periodically due as every taxable period prompts an autonomous tax obligation. The tax structure in place has to contend with the delineation of the taxable schedule, the provisions, as well as conditions applicable to specific taxpaying entities, and the computation period of the taxable income. The core of the discourse lies specifically on the period for the computation of taxable income.

Income and consequent deductions are commonly decided on a yearly basis in most jurisdictions across the United States. Under § 441 of the U. S. Code, taxable income will undergo computation in specific respect to the taxable year of the taxpayer or taxpaying entity (26 U. S. Code § 441). However, certain issues are illustrated as far as the period for the computation of taxable income is concerned:

  • How does the period for the computation of taxable income apply in situations whereby the taxpayers/taxpaying entities do not preserve accounting records and books?
  • Are certain parties allowed to possess different taxable periods depending on whether they uphold accounting records and books?
  • Is it possible to establish taxable periods that correspond with accounting periods?

            The issues derived in relation to the subject are based on the accounting period. While § 441 establishes a fixed computation schedule as far as taxable income is concerned, it does not considerably address the complexities associated with the accounting process. After all, some taxpayers do not maintain accounting records.

The questions offer a foundation for understanding the role that accounting assumes in the effectiveness of taxation. Issues to be addressed include the accounting period, the significance of the calendar year, and the impact of accounting records and books on the period for the computation of taxable income among taxpayers. The law provides general information concerning the concepts in question. § 441 offers a definition of terms such as “calendar year,” “yearly accounting period,” and the “fiscal year” (26 U. S. Code § 441). The accounting process poses an impact on how the computation period is developed and implemented. A taxpayer’s management of accounting records affects the calculation schedule for the entity’s taxable income.

Jurisdictions across the United States tend to adopt the calendar year as the key taxable period because of overlapping accounting and taxable periods. Since the income to be levied relies on the quantity of the income depicted in the accounting record, then it makes sense to utilize a single annual period for calculating the taxable income. However, the issue is complicated when taxpayers and taxpaying entities lack accounting records and books that are essential for simplifying the time for the computation of the taxable income.

Works Cited

“26 U. S. Code § 441 – Period for Computation of Taxable Income.” Cornell Law School, n. d. www.law.cornell.edu/uscode/text/26/441. Accessed 24 May 2018.

Code of Federal Regulations, Title 26, Internal Revenue, Parts 2 to 29. Office of the Federal Register, 2015.

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