SERVICE NOTES APPLICABILITY OF ANNUALIZATION REQUIREMENTS TO TRUST SHORT TAXABLE YEARS.

Notice 88-18

Under section 1403 of the Tax Reform Act of 1986 (the Act) all trusts are required to report income on a calendar year basis for taxable years beginning after December 31, 1986. Any trust that, pursuant to section 1403 of the Act, has a short taxable year in 1987 must annualize income earned in the short year. Section 443 and the regulations thereunder provide guidance for annualizing income. Those rules are applicable for purposes of annualizing the income earned by the trust in the short year.

This document serves as an "administrative pronouncement" as that term is described in section 1.6661-3(b)(2) of the Income Tax Regulations and may [be] relied upon to the same extent as a revenue ruling or revenue procedure.

The principal author of this notice is Maurice Foley of the Legislation and Regulation Division. For further information regarding this notice contact Mr. Foley on (202) 566-4336 (not a toll-free call).