Rev. Rul. 61-41

A sole proprietorship that computed its taxable income on the basis of a calendar year elected to have the unincorporated business enterprise taxed as a domestic corporation under the provisions of section 1361 of the Internal Revenue Code of 1954 beginning with the taxable year ended December 31, 1954. In April 1960, the proprietorship's legal status was changed from an unincorporated business enterprise to that of a corporation. Held , the sole proprietorship and the new corporation are separate entities for Federal income tax purposes. Accordingly, two U.S. Corporation Income Tax Returns, Form 1120, are required to be filed, one return by the unincorporated business enterprise under section 1361 of the Code for the period January 1, 1960 to the date of incorporation of the sole proprietorship, and the other return by the new corporation for the period from the date of incorporation to December 31, 1960, if the corporation chooses to remain on a calendar-year basis. Sec. 1.1361-5 of the Income Tax Regulations.