PaulCo, DavidCo, and Sean form a partnership with cash contributions of $80,000, $50,000 and $30,000, respectively, and agree to share profits and losses in the ratio of their original cash contributions. PaulCo uses a January 31 fiscal year-end, whereas DavidCo and Sean use a November 30 and December 31 year-end, respectively. The partnership must use the least aggregate deferral method to determine its year-end.

Question

Quizplus · Accepted Answer

The least aggregate deferral method requires the partnership to choose a fiscal year-end that minimizes the total tax deferral for all partners. This method considers the different fiscal year-ends of the partners and selects the one that results in the smallest deferral period for the partnership's income.

PaulCo, DavidCo, and Sean Form a Partnership with Cash Contributions