Sarah, Sue, and AS Inc.formed a partnership on May 1, 20X9, called SSAS, LP.Now that the partnership is formed, they must determine its appropriate year-end.Sarah has a 30 percent profits and capital interest while Sue has a 35 percent profits and capital interest.Both Sarah and Sue have calendar year-ends.AS Inc.holds the remaining profits and capital interest in the LP, and it has a September 30 year-end.What tax year-end must SSAS, LP, use for 20X9, and which test or rule requires this year-end?
A)12/31, least aggregate deferral test.
B)9/30, majority interest taxable year.
C)12/31, majority interest taxable year.
D)12/31, principal partners test.

Question

Quizplus · Accepted Answer

The partnership must use the majority interest taxable year, which is the calendar year-end of 12/31, because Sarah and Sue together hold a majority interest (65%) and both have a calendar year-end.