Natural Business Year

Natural Business Year

A fiscal year that runs according to something other than the calendar year. A natural business year often is chosen according to when most sales in a year are completed. For example, a swimsuit manufacturer may end its natural business year in September, after most swimsuits for the year are sold.
References in periodicals archive ?
2002-38 and 2002-39 provide these procedures for a partnership or S corp to change its year if its current year no longer qualifies as a natural business year (or, for certain S corps, an ownership tax year).
3] An exception allows changing to a natural business year where less deferral of income to the owners result
We believe the March 31 fiscal year will better reflect our natural business year and allow us to provide financial guidance after the important holiday selling season," said Fred Gysi, senior vice president of finance & administration and CFO, THQ.
A natural business year because it meets a 25% mechanical test;
SMF presently contemplates changing its fiscal year end to June 30th as of June 30, 2001 in order to report on a more natural business year as well as on a calendar quarter basis which should enable easier and more effective following by the investment banking community.
Year-end financial statements that reflect the natural business year will generally present a more liquid position due to lower inventories and the sales peak just experienced.
Election of year-end: If an S corporation is required to change from a natural business year to a calendar year due to changes in the business climate or no longer qualifying, Rev.
2002-38 (18) allowed partnerships to change their accounting period if their current year no longer qualified as a natural business year or an ownership year.
The short tax year must result from a change in tax year because the (1) partnership's or S corporation's tax year no longer qualifies as a natural business year or (2) S corporation's tax year no longer qualifies as the ownership tax year.
The request, prepared by the Tax Accounting TRP (chaired by Bob Kilinskis), noted that those revenue procedures require partners and S shareholders of entities with fiscal years ending on or after May 10, 2002, that no longer meet the "25% gross receipts test" for a natural business year, to include more than 12 months of partnership or S income in their 2002 or 2003 individual returns.