Which of the following statements regarding a partnership's tax year is/are correct?
I.A partnership formed on July 1 must adopt a tax year ending on June 30.
II.A valid business purpose can no longer be claimed as a reason for adoption of a tax year other than the generally required tax year.

Question

Which of the following statements regarding a partnership's tax year is/are correct?
I.A partnership formed on July 1 must adopt a tax year ending on June 30.
II.A valid business purpose can no longer be claimed as a reason for adoption of a tax year other than the generally required tax year.
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Quizplus · Accepted Answer

Both statements are incorrect.

Statement I is incorrect because a partnership formed on July 1 may adopt any tax year as long as it is not longer than 12 months and ends on the last day of any month other than December.

Statement II is incorrect because a valid business purpose can still be claimed as a reason for adopting a tax year other than the generally required tax year. However, the IRS may review and evaluate the claimed business purpose to determine if it is valid.

Which of the Following Statements Regarding a Partnership's Tax Year