Dogg Corporation,Katt Corporation,and Rabitt Corporation are equal partners in Critter Partnership.The partner's fiscal year ends follow:
Which of the following statements is (are)correct?

I.Critter Partnership may elect to use any of the three dates that the partners use.
II.Critter Partnership must use the tax year of the partner that creates the least amount of deferral.

Question

Dogg Corporation,Katt Corporation,and Rabitt Corporation are equal partners in Critter Partnership.The partner's fiscal year ends follow:
Which of the following statements is (are)correct?

I.Critter Partnership may elect to use any of the three dates that the partners use.
II.Critter Partnership must use the tax year of the partner that creates the least amount of deferral.
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Quizplus · Accepted Answer

According to the rules of partnership taxation, all partners in a partnership must use the same tax year, and the partnership must use the tax year of the partner who owns the largest interest in the partnership. Therefore, statement I is incorrect. Statement II is correct, as the partnership must use the tax year of the partner with the lowest deferral in order to minimize taxes and avoid penalties for late payment.

Dogg Corporation,Katt Corporation,and Rabitt Corporation Are Equal Partners in Critter