I'm preparing a short year return
for a individual
who filed for bankruptcy
on 9/19/2012. The first short year 1040 is for the period prior to the bankruptcy filing
, or 1/1/12-9/18/12. The second short year 1040 is for the period of bankruptcy 9/19/12-12/31/12 and this 2nd short year will be the 1040 attachment of the bankruptcy estate's 1041 filing.
My question relates to exemptions. I'm using IRS
Pub 538 to calculate the short year tax liability
, and I was unsure if you needed to use whole months in the calculation. Per the Pub 538 instructions, "multiply the dollar amount of your exemptions by the number of months in the short tax
year and divide the result by 12."
Since the bankruptcy filing was 9/19, what number do I use for the number of months in the exemption calculation?
1. 8 months (Jan - Aug)
2. 8.5 months (Jan - Sept 15)
3. 9 months (Jan - Sept, with rounding 19 days closer to end of month)
Thank you for your help!