Rev. Proc. 68-41

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to provide an administrative procedure whereby a bank or trust company serving as trustee or co-trustee may expeditiously obtain approval of a change in annual accounting period of an inter vivos or testamentary trust.

SEC. 2. BACKGROUND.

Under the provisions of section 1.442-1(b)(1) of the Income Tax Regulations, a bank or trust company acting in a fiduciary capacity for a large number of traditional family type trusts and desiring to change the annual accounting period of a trust for the purpose of spreading the workload is required to file an application on Form 1128, Application for Change in Accounting Period, with the Commissioner of Internal Revenue on or before the last day of the month following the close of the short period for which a Federal income tax return is required to effect the change of accounting period.

SEC. 3. PROCEDURE.

.01 Subject to the conditions and limitations contained in this Revenue Procedure, a bank or trust company serving as trustee or co-trustee and desiring to change the annual accounting period of an inter vivos or testamentary trust, may file an application on Form 1128 with the District Director of Internal Revenue for the district in which the return for the trust is filed. Reference to this Revenue Procedure should be made a part of the application. The application shall be filed on or before the last day of the month following the close of the short period for which a return is required to effect the change of accounting period. A copy of the application must be attached to the return filed for the short period.

.02 Unless a letter is received by the trustee or co-trustee from the Internal Revenue Service denying permission because the Form 1128 is not timely filed, it may be assumed that the change has been granted provided the trustee or co-trustee has complied with all of the provisions of this Revenue Procedure. Trustees or co-trustees complying with the provisions of the Revenue Procedure will be deemed to have obtained the approval of the Commissioner of Internal Revenue for a change in accounting period of the trust.

SEC. 4. CONDITION.

The taxable income of the trust, if any, shown on the short period return must be placed on an annual basis and the tax computed in accordance with the provisions of section 443(b) of the Internal Revenue Code of 1954 and the regulations thereunder.

SEC. 5. LIMITATION.

For purposes of this Revenue Procedure, where the change in taxable year of the trust results in a deferral of income, the amount deferred must not exceed $5,000.

SEC. 6. TRUSTS NOT COVERED BY THIS PROCEDURE.

This Revenue Procedure does not apply to (i) trusts whose annual accounting period has been changed at any time within the ten calendar years ending with the calendar year which includes the beginning of the short period required to effect the change of annual accounting period; or (ii) inter vivos trusts in which the beneficiary is also the grantor. In such cases, applications must be filed on Form 1128 with the Commissioner in accordance with section 1.442-1(b)(1) of the regulations.

SEC. 7. EFFECTIVE DATE.

This revenue Procedure is effective on November 25, 1968, the date of publication in the Internal Revenue Bulletin.

SEC. 8. INQUIRIES.

Inquiries in regard to this Revenue Procedure should refer to its number and be addressed to the Commissioner of Internal Revenue, Attention: T:I:C:1: AM&P, Washington, D.C., 20224.