US persons with foreign shareholdings exceeding 50% of a foreign corporation are advised to consider making a timely application to the IRS for consent to use the foreign corporation’s balance date for reporting purposes.

This needs to be done on Form 1128 Application to Adopt, Change or Retain a Tax Year.

Whilst the majority of countries have calendar year balance dates, New Zealand is one of the exclusions, having 31 March for most taxpayers.

The fallout occurs in preparing such forms as Form 5471 in which an income statement and a balance sheet are required to be furnished using the tax year of the majority US shareholder.

This can mean reworking New Zealand financial statements into the calendar year. From recent experience, no mean feat.

The application for the consent to change the tax year (Form 1128) must be made by the due date of the federal tax return for the first year of effect.

However, there is a limited exception for unusual and compelling circumstances being 90 days after the due date.