This year, HPLC, LLC was formed by H Inc., P Inc., L Inc., and C Inc. Each member had an equal share in the LLC's capital. H Inc., P Inc., and L Inc. each had a 30% profitsinterest in the LLC with C Inc. having a 10% profits interest. The members had the following tax year-ends: H Inc. [1/31], P Inc. [5/31], L Inc. [7/31], and C Inc. [10/31]. What tax year-end must the LLC use?
A) 5/31.
B) 1/31.
C) 7/31.
D) 10/31.

Question

Quizplus · Accepted Answer

The LLC must use a tax year-end that is the same as the tax year-end of a majority of its members. In this case, H Inc., P Inc., and L Inc. each have a 30% profits interest in the LLC, which is a majority of the members. Therefore, the LLC must use a tax year-end that is the same as the tax year-end of H Inc., P Inc., or L Inc. Since H Inc. has a tax year-end of 1/31, the LLC must use a tax year-end of 1/31.

This Year, HPLC, LLC Was Formed by H Inc