(a) Taxpayer filing separate returns. If a taxpayer, with the approval of the Department of Revenue, changes the basis of computing taxable income from the fiscal year to the calendar year, a separate return shall be filed for the period between the close of the last fiscal year for which return shall be made and the following December 31. If the change is made from the calendar year to the fiscal year, a separate return shall be filed for the period between the close of the last calendar year for which return was filed and the date designated as the close of the last fiscal year. If the change is made from one fiscal year to another fiscal year, a separate return shall be filed for the period between the close of the former fiscal year and the date designated as the close of the new fiscal year. If a taxpayer filing the taxpayer's first return for income tax keeps accounts on the basis of a fiscal year, the taxpayer shall file a separate return for the period between the beginning of a calendar year in which such fiscal year ends and the end of such fiscal year. In all of the above cases the taxable income shall be computed on the basis of such period for which the separate return is filed, and the tax shall be paid thereon at the rate in effect during the calendar year in which such period is included; and, except for the period during which the taxpayer dies, the exemptions allowed in this chapter shall be reduced respectively to amounts which bear the same ratio to the full exemptions provided for as the number of months in such period to 12 months.

(b) Corporations filing Alabama consolidated returns. If a corporation changes the basis of computing its income from the fiscal year to the calendar year by virtue of its election to file an Alabama consolidated return under Section 40-18-39, an Alabama consolidated return shall be filed for the period between the close of the last fiscal year for which the return shall be filed and the following December 31. If the change is made from the calendar year to the fiscal year, and the taxpayer elects to file an Alabama consolidated return under Section 40-18-39, an Alabama consolidated return shall be filed for the period between the close of the last calendar year for which the return was filed and the date designated as the close of the first fiscal year. If the change is made from one fiscal year to another fiscal year, and the taxpayer elects to file an Alabama consolidated return under Section 40-18-39, an Alabama consolidated return shall be filed for the period between the close of the former fiscal year and the date designated as the close of the new fiscal year for the Alabama affiliated group. If a taxpayer filing an initial return for income tax keeps accounts on the basis of a fiscal year, and the taxpayer elects to file an Alabama consolidated return under Section 40-18-39, the taxpayer shall file an Alabama consolidated return for the period between the beginning of the calendar year in which its fiscal year ends and the end of such fiscal year for the Alabama consolidated group. In all the above cases, the taxpayer's taxable income shall be computed on the basis of the period for which the Alabama consolidated return is filed, and the tax shall be paid thereon at the rate in effect during the calendar year in which such period is included.