N.M. Admin. Code § 3.3.7.8

Current through Register Vol. 35, No. 23, December 10, 2024

Section 3.3.7.8 - PRORATION FOR FISCAL YEAR TAXPAYERS

A. A taxpayer whose taxable year ends on a date other than December 31 shall compute the tax on the tax taxable income for the entire fiscal year using both the old and the new rates. The final tax is the sum of that part of the old tax which is proportionate to that portion of the taxable year preceding the effective date of the new tax and that part of the new tax which is proportionate to that portion of the taxable year beginning with the effective date of the new tax rates.

B. Example 1: A taxpayer files a fiscal year return beginning October 1, 1982, and ending September 30, 1983. The tax taxable income for the entire fiscal year is $10,000. The taxpayer computes the tax due on the entire $10,000 based on the 1982 tax table and also computes the tax due on the entire $10,000 based on the 1983 tax table. As three months of the fiscal year were in 1982 and nine months were in 1983, the final tax is 1/4 of the tax computed based on the 1982 tax table plus 3/4 of the tax computed based on the 1983 tax table.

C. Example 2: A taxpayer files a fiscal year return beginning July 1, 1982, and ending June 30, 1983. The taxable income for the entire fiscal year is $50,000. The taxpayer computes the tax due on the entire $50,000 based on the 1983 tax rate. As six months of the fiscal year were in 1982 and six months were in 1983, the final tax is one half of the tax computed based on the 1982 tax table plus one half of the tax computed based on the 1983 tax table.

N.M. Admin. Code § 3.3.7.8

1/6/84, 12/29/89, 3/16/92, 1/15/97; 3.3.7.8 NMAC - Rn, 3 NMAC 3.7.8, 12/14/00