Doug,Kate,and Gabe own Refiner Group,Inc.,an electing S corporation.The shareholder's ownership percentages and fiscal year ends follow: Which of the following statements is (are)correct?
I.Refiner Group,Inc.must use a calendar year.
II.Refiner Group,Inc.may elect to use a fiscal year ending January 31.

Question

Doug,Kate,and Gabe own Refiner Group,Inc.,an electing S corporation.The shareholder's ownership percentages and fiscal year ends follow:  Which of the following statements is (are)correct?
I.Refiner Group,Inc.must use a calendar year.
II.Refiner Group,Inc.may elect to use a fiscal year ending January 31.
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Quizplus · Accepted Answer

S corporations generally must use a calendar year as their taxable year, unless they can establish a business purpose for using a fiscal year. However, if an S corporation has a valid business purpose for using a fiscal year, it may elect to use a fiscal year ending no later than the 15th day of the third month following the close of its taxable year. Therefore, statement II is correct. Statement I is incorrect because using a fiscal year ending January 31 would satisfy the requirement for a valid business purpose.

Doug,Kate,and Gabe Own Refiner Group,Inc