Gold Corporation, Silver Corporation, and Platinum Corporation are equal partners in the GSP Partnership, which was formed on July 1, 2014. Gold and Silver use a calendar tax year, and Platinum's tax year ends June 30th. GSP is not a seasonal business.

Question

Quizplus · Accepted Answer

According to the tax law, partnerships must use a tax year ending on December 31st unless they can establish a business purpose for a different tax year. Since Gold and Silver use a calendar year ending on December 31st, it would make sense for GSP to adopt the same tax year. However, Platinum can retain its tax year ending on June 30th since it is a minority partner and its tax year is not based on a calendar year. Therefore, choice A is the best option.

Gold Corporation, Silver Corporation, and Platinum Corporation Are Equal Partners