The IRS today issued a release noting that many U.S. corporations that use a fiscal year (and not a calendar year) for federal income tax purposes will pay a “blended” rate of federal income tax under the new tax law (Pub. L. No. 115-97).
Under the new tax law, the rate of corporate income tax was reduced to a flat rate of 21%, effective for tax years beginning after December 31, 2017.
Today’s IRS release—IR-2018-99—notes that with the new tax law, fiscal year corporate taxpayers will determine their federal income tax for fiscal years that include January 1, 2018, by:
The IRS release states that fiscal year taxpayers that already filed their federal income tax returns for the tax year that includes January 1, 2018, and that did not show the blended rate, may want to consider filing an amended return.
As noted in the IRS release, the federal sequester law remains in effect for the 2018 fiscal year, and corporations need to be mindful how these rules may affect their tax credits and refunds. Read an IRS release on the effect of sequestration on the alternative minimum tax credit for corporations.
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