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Changing Your Association's Fiscal Year
Some associations have fiscal years ending in the middle of the year rather than on December 31. For a variety of reasons, most association's prefer a calendar year, with the new budget starting on January 1. If the Bylaws do not establish a fixed date, the board can change their association's fiscal year to a calendar year by giving appropriate notices. If the period has been set in the governing documents, the document must be amended.

The Secretary of State does not care when an association's accounting year ends. As for the IRS and the Franchise Tax Board, as long as boards meet the procedural requirements, the year-end change is automatically approved. The procedures are fairly easy to comply with. Boards simply need to identify the "short period," and timely file a tax return for that short period, along with a statement explaining the change. The association is not allowed to report a loss during the "short period" if it has reported taxable income the prior year (this is the anti abuse portion of the procedural requirements). Boards should contact the association's CPA for help in making the change.

Adams Kessler PLC
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