Fern, Inc., Ivy Inc., and Jason formed a general partnership.Fern owns a 50% interest and Ivy and Jason each own 25% interests.Fern, Inc.files its tax return on a July 1 - June 30 fiscal year; Ivy Inc.files on a September 1 - August 31 fiscal year; and Jason is a calendar year taxpayer.Which of the following statements is true regarding the taxable year the partnership can choose?
A)The partnership must choose the calendar year because it has no principal partners.
B)The partnership must choose a June 30 year-end because Fern, Inc.is a majority partner.
C)The partnership can request permission from the IRS to use a January 31 fiscal year if it can establish that is a natural business year.
D)The partnership cannot use the "least aggregate deferral" method to determine its taxable year.
E)None of the above.

Question

Quizplus · Accepted Answer

Since the partnership has different fiscal years for its partners, it can request permission from the IRS to use a fiscal year that aligns with the partnership's natural business year. It cannot use the "least aggregate deferral" method as this method is only available to partnerships with principal partners. The choice of June 30 year-end based on Fern's majority interest or a calendar year is not applicable in this scenario.

Fern, Inc, Ivy Inc