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 a30% profits and capital interest while Sue has a 35% profits and capital interest. BothSarah and Sue have calendar year-ends. AS Inc. holds the remaining profits and capitalinterest in the LP, and it has a September 30 year-end. What tax year-end must SSAS, LPuse for 20X9 and which test or rule requires this year-end?
A) 12/31, principal partners test.
B) 12/31, majority interest taxable year.
C) 12/31, least aggregate deferral test.
D) 9/30, majority interest taxable year.

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 65% interest, which is a majority.