Sec. 1378 Taxable year of S corporation
(a) General rule. For purposes of this subtitle, the taxable year of an S corporation shall be a permitted year.
(b) Permitted year defined. For purposes of this section, the term "permitted year" means a taxable year which--
(1) is a year ending December 31, or
(2) is any other accounting period for which the corporation establishes a business purpose to the satisfaction of the Secretary.
For purposes of paragraph (2), any deferral of income to shareholders shall not be treated as a business purpose.
