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Calendar Year

Definition

Generally speaking, a calendar year begins on the New Year's Day of the given calendar system and ends on the day before the following New Year's Day, and thus consists of a whole number of days. A year can also be measured by starting on any other named day of the calendar, and ending on the day before this named day in the following year. This may be termed a "year's time", but not a "calendar year". To reconcile the calendar year with the astronomical cycle certain years contain extra days.

What is a 'Calendar Year'

A calendar year is the one-year period that begins on January 1 and ends on December 31, based on the commonly used Gregorian calendar. For individual and corporate taxation purposes, the calendar year commonly coincides with the fiscal year, and therefore it generally comprises all of the year's financial information used to calculate income tax payable.

Explaining 'Calendar Year'

Most individuals and many companies use the calendar year as their fiscal year, or the one-year period on which their payable taxes are calculated. However, some companies choose to report their taxes based on a fiscal year, starting on April 1 and ending on March 31, to better conform to seasonality patterns or other accounting concerns applicable to their businesses.

Calendar Year vs. Fiscal Year

A calendar year is always January 1 to December 31. A fiscal year, by contrast, can start and end at any point during the year, as long as it comprises a full twelve months. A company that starts its fiscal year on January 1 and ends it on December 31 operates on a calendar year basis. The calendar year represents the most common fiscal year in the business world. Large companies including Alphabet Inc., the parent company of Google, Amazon.com and Facebook use the calendar year as their fiscal year. Other companies elect to maintain a fiscal year. Walmart and Target Corporation, for example, have fiscal years that do not coincide with the calendar year.

Advantages and Disadvantages of Calendar Year

Perhaps the biggest advantage of using the calendar year is simplicity. For sole proprietors and small businesses in particular, tax reporting is often easier when the business's tax year matches up with that of the business owner. Moreover, while any sole proprietor or business may adopt the calendar year as its fiscal year, the Internal Revenue Service (IRS) imposes specific requirements on those businesses wanting to use a different fiscal year.


Further Reading


Calendar effects in Eastern European financial markets: evidence from the Czech Republic, Slovakia and Slovenia
www.tandfonline.com [PDF]
… Applied Financial Economics … The model takes the form where J(−i) = 1 if the day t is the ith last trading day of December before the turn of the year and zero … Calendar effects in Eastern European financial markets: evidence from the Czech Republic, Slovakia and Slovenia …

Calendar anomalies: Abnormal returns at calendar turning pointsCalendar anomalies: Abnormal returns at calendar turning points
www.tandfonline.com [PDF]
… Applied Financial Economics … The model takes the form where J(−i) = 1 if the day t is the ith last trading day of December before the turn of the year and zero … Calendar effects in Eastern European financial markets: evidence from the Czech Republic, Slovakia and Slovenia …

Calendar effects in Chinese stock marketCalendar effects in Chinese stock market
eprints.soton.ac.uk [PDF]
… Applied Financial Economics … The model takes the form where J(−i) = 1 if the day t is the ith last trading day of December before the turn of the year and zero … Calendar effects in Eastern European financial markets: evidence from the Czech Republic, Slovakia and Slovenia …

An examination of the calendar anomalies in the Romanian stock marketAn examination of the calendar anomalies in the Romanian stock market
www.sciencedirect.com [PDF]
… Applied Financial Economics … The model takes the form where J(−i) = 1 if the day t is the ith last trading day of December before the turn of the year and zero … Calendar effects in Eastern European financial markets: evidence from the Czech Republic, Slovakia and Slovenia …

American depository receipts and calendar anomaliesAmerican depository receipts and calendar anomalies
www.tandfonline.com [PDF]
… Applied Financial Economics … The model takes the form where J(−i) = 1 if the day t is the ith last trading day of December before the turn of the year and zero … Calendar effects in Eastern European financial markets: evidence from the Czech Republic, Slovakia and Slovenia …

Calendar anomalies in the Gulf Cooperation Council stock marketsCalendar anomalies in the Gulf Cooperation Council stock markets
www.sciencedirect.com [PDF]
… Applied Financial Economics … The model takes the form where J(−i) = 1 if the day t is the ith last trading day of December before the turn of the year and zero … Calendar effects in Eastern European financial markets: evidence from the Czech Republic, Slovakia and Slovenia …

Ukrainian financial markets: an examination of calendar anomaliesUkrainian financial markets: an examination of calendar anomalies
www.emerald.com [PDF]
… Applied Financial Economics … The model takes the form where J(−i) = 1 if the day t is the ith last trading day of December before the turn of the year and zero … Calendar effects in Eastern European financial markets: evidence from the Czech Republic, Slovakia and Slovenia …

Islamic calendar anomalies: Evidence from Pakistani firm-level dataIslamic calendar anomalies: Evidence from Pakistani firm-level data
www.sciencedirect.com [PDF]
… Applied Financial Economics … The model takes the form where J(−i) = 1 if the day t is the ith last trading day of December before the turn of the year and zero … Calendar effects in Eastern European financial markets: evidence from the Czech Republic, Slovakia and Slovenia …

Calendar effects in the London Stock Exchange FT–SE indicesCalendar effects in the London Stock Exchange FT–SE indices
www.tandfonline.com [PDF]
… Applied Financial Economics … The model takes the form where J(−i) = 1 if the day t is the ith last trading day of December before the turn of the year and zero … Calendar effects in Eastern European financial markets: evidence from the Czech Republic, Slovakia and Slovenia …



Q&A About Calendar Year


Do all businesses have to use this method for their tax reporting purposes?

No, sole proprietors or small businesses may adopt this method if they choose to do so; however, they must meet certain requirements set by the Internal Revenue Service (IRS).

What are some advantages of using the calendar year?

The biggest advantage of using the calendar year is simplicity.

When does a fiscal year start and end?

A fiscal year can start and end at any point during the year, as long as it comprises a full twelve months.

Why do large companies use this method for their fiscal years?

Large companies including Alphabet Inc., Amazon.com and Facebook use this method because it is simple to implement.

What is a calendar year?

A calendar year is the one-year period that begins on January 1 and ends on December 31, based on the commonly used Gregorian calendar.

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