### Question
What is the definition of permitted year?


### Answer
The definition of **permitted year** is as follows in *26 U.S.C. § 1378*:

> a taxable year which—



(1) is a year ending December 31, or



(2) is any other accounting period for which the corporation establishes a business purpose to the satisfaction of the Secretary

#### Citation:
  - *26 U.S.C. § 1378*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter S-Tax Treatment of S Corporations and Their Shareholders > PART IV-DEFINITIONS; MISCELLANEOUS**

