Annual Accounting Periods

  1. Law
  2. Georgia Code
  3. Revenue and Taxation
  4. Income Taxes
  5. Imposition, Rate, and Computation; Exemptions
  6. Annual Accounting Periods

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  1. The net income shall be computed upon the basis of the taxpayer's annual accounting period in accordance with the method of accounting regularly employed in keeping the books of the taxpayer. If no such method of accounting has been so employed or if the method employed does not clearly reflect the income, the computation shall be made in accordance with the method which, in the opinion of the commissioner, clearly reflects the income. If the taxpayer's annual accounting period is other than a fiscal year or if the taxpayer has no annual accounting period or does not keep books, the net income shall be computed on the basis of the calendar year. A taxpayer utilizing a fiscal year may return his net income under this chapter on the basis of his fiscal year with the approval of the commissioner and subject to such rules and regulations as the commissioner may establish.
  2. With the approval of the commissioner and under such regulations as he may prescribe, a taxpayer may change his taxable year from fiscal year to calendar year or otherwise. In the case of any such change, the net income shall be computed upon the basis of the new taxable year when approval is obtained from the commissioner at least 30 days prior to the close of the proposed taxable year.
  3. The amount of all items of gross income shall be included in the gross income for the taxable year in which received by the taxpayer unless, under methods of accounting permitted by this Code section, any amounts of gross income are to be properly accounted for as of a different period.
  4. The deductions and credits provided for in this chapter shall be taken for the taxable year in which "paid or accrued" or "paid or incurred" depending upon the method of accounting on the basis of which the net income is computed unless, in order to clearly reflect the income, the deductions or credits should be taken as of a different period.
  5. Whenever in the opinion of the commissioner it is necessary in order to determine clearly the income of any taxpayer, inventories shall be taken by the taxpayer on the basis prescribed by the commissioner. Each such basis shall conform as nearly as possible to the best accounting practice in the particular trade or business which most clearly reflects the income.
  6. If a return has been filed within the three years immediately preceding the date of the taxpayer's death, income and expenses of a taxpayer who dies during the taxable year shall be computed on the same method of accounting, whether cash or accrual, as was used by the taxpayer in the preparation of the last income tax return filed by him with the commissioner. If no return has been filed within the three-year period, the return of a deceased taxpayer shall be prepared on the cash method unless the commissioner certifies that the cash method, because of particular circumstances, is not reasonable to either the state or the heirs, legatees, or devisees interested in the taxpayer's estate. If the commissioner certifies that the cash method is unreasonable, he may order the preparation of the return on the accrual method.
  7. The provisions of Internal Revenue Code Section 441(f) regarding the election of a taxable year consisting of 52-53 weeks shall also apply for purposes of this chapter. Accordingly, when the effective date or the applicability of any provision of this chapter or any general law is expressed in terms of taxable years beginning with reference to a specified date which is the first day of a month, a 52-53 week taxable year shall be treated:
    1. As beginning with the first day of the calendar month beginning nearest to the first day of such 52-53 week taxable year; and
    2. As ending with the last day of the calendar month ending nearest to the last day of such 52-53 week taxable year.
  8. The commissioner shall promulgate any rules and regulations necessary to implement and administer this Code section.

(Ga. L. 1931, Ex. Sess., p. 24, § 20; Ga. L. 1931, p. 7, § 85; Code 1933, § 92-3118; Ga. L. 1941, p. 210, § 6; Ga. L. 1945, p. 483, §§ 1, 2; Ga. L. 1978, p. 1444, § 1; Code 1933, § 91A-3616, enacted by Ga. L. 1978, p. 309, § 2; Ga. L. 1979, p. 5, § 70; Ga. L. 1987, p. 191, § 2; Ga. L. 2006, p. 221, § 1/HB 1042.)

Editor's notes.

- Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, provides that this Act is applicable to taxable years ending on or after March 11, 1987, and that a taxpayer with a taxable year ending on or after January 1, 1987, and before March 11, 1987, may elect to have the provisions of that Act apply.

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, also provided that tax, penalty, and interest liabilities and refund eligibility for prior taxable years shall not be affected by that Act.

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, also provided that provisions of the federal Tax Reform Act of 1986 and of the Internal Revenue Code of 1986 which as of January 1, 1987, were not yet effective become effective for purposes of Georgia taxation on the same dates as they become effective for federal purposes.

Ga. L. 2006, p. 221, § 2/HB 1042, not codified by the General Assembly, provides that subsections (g) and (h) shall be applicable to all taxable years beginning on or after January 1, 2006, and to all taxable years which would be considered as beginning on January 1, 2006.

RESEARCH REFERENCES

Am. Jur. 2d.

- 71 Am. Jur. 2d, State and Local Taxation, § 451 et seq.

C.J.S.

- 85 C.J.S., Taxation, § 1976.

ALR.

- Year in which loss or bad debt must be charged in order to be allowed as a deduction from taxpayer's income, 67 A.L.R. 1015; 21 A.L.R. 697; 135 A.L.R. 1430.

Right of bank in computing income tax to deduction corresponding to amount which it has been required by banking authorities to write down or charge off in respect of securities held by it, 100 A.L.R. 702.

Method of calculating value of stock of goods or the like for purposes of tangible personal property tax, 66 A.L.R.2d 833.


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