Which of the following fiduciary entities are required to use the calendar year as their taxable period for income tax purposes?
A.Estates
B.Trusts (except those that are exempt)
C.Both estates and trusts (except those that are exempt)
D.Neither estates nor trusts (except those that are exempt)
The only three entities that are allowed to select a fiscal year are: estates, C corporations and tax exempt entities.
Trusts, along with partnerships, S corporations and personal service corporations mus use the calendar year as their taxable period or the tax year of their owners. Some trusts can change to a different calendar year if they can establish a business purpose for doing so.
