Section 444 and Partnership Taxable Year

Section 444 of the Internal Revenue Code generally allows a partnership to retain or adopt any taxable year provided that certain requirements are met:

1. For new partnerships, the deferral period is no longer than three months and 
2. the partnership is not part of a tiered structure. IRC §444(b)(1) and (d)(3). 

The "deferral period" is the number of months between the beginning of the year in question and the close of the first "required taxable year" ending within the year in question (as determined pursuant to §706(b)).

The policy and purpose of §444 is permitting  existing business entities to retain existing nonconforming entity taxable years or to change to years of lesser deferral without sacrificing revenue and to permit new entities to obtain limited deferred periods in order to meet the concerns of tax return preparers.

The "toll charge" for a partnership §444 election is payment of the entity-level excise tax imposed by §7519.