Sarah, Sue, and AS Incorporated 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 30percent profits and capital interest while Sue has a 35percent profits and capital interest. Both Sarah and Sue have calendar year-ends. AS Incorporated 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 65% interest, which is a majority.

Sarah, Sue, and AS Incorporated Formed a Partnership on May