Company News

Fiscal year corporations to pay “blended” income tax rates

May 16, 2018

The IRS released Notice 2018-38 on April 16, 2018 regarding application of changes to corporate
income tax rates for fiscal year corporations with years beginning before January 1, 2018 but
ending after December 31, 2017. Congress enacted a flat 21% corporate income tax rate
beginning January 1, 2018 for most corporate filers. For fiscal year corporations that this applies
to, the income tax rate will be “blended” between the old rates in effect and the new rates. In
general, tax will need computed under both rate structures, and the pro-rated based on the
number of days in which each rate applies for the fiscal year. An example calculation has been
provided by the IRS in the notice release.