### Question
What does base period year mean?


### Answer
**Base period year** has the following meaning in *26 U.S.C. § 936*:

> each of 3 taxable years which are among the 5 most recent taxable years of the corporation ending before October 14, 1995, determined by disregarding—



(i) one taxable year for which the corporation had the largest inflation-adjusted possession income, and



(ii) one taxable year for which the corporation had the smallest inflation-adjusted possession income

#### Citation:
  - *26 U.S.C. § 936*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter N-Tax Based on Income From Sources Within or Without the United States > PART III-INCOME FROM SOURCES WITHOUT THE UNITED STATES > Subpart D-Possessions of the United States**

