The YEAR function is a date and time function which returns the year value from a date value. For the formula to function as intended the cell does not need to be formatted, but must be a valid date/time value.

This is the format of the YEAR function:

=YEAR(DATE VALUE)

Here is an example of the YEAR function:

=YEAR(01-01-2020) = 2020 

This function is valuable when you have date/time data available but need to segment it by a variety of parameters, one of which being year of occurrence. This could be for accounting purposes, or for analysis.

An example of a functional implementation of this would be performing a bad debt assessment on outstanding loans, and needing to segment debt based on the fiscal period where the loan was created and the one it is set to terminate in. As the likelihood for already bad debt to be recovered decreases over time, using the year of issuance is a good starting point for an analysis.

ex: date information is stored in column B and data starts in row 3

=YEAR(B3)