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?
$$\begin{array} { l l }
\text { Dogg Corporation } & \text { February } 28 \
\text { Katt Corporation } & \text { May } 31 \
\text { Rabitt Corporation } & \text { August } 31
\end{array}$$
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?
$$\begin{array} { l l } 
\text { Dogg Corporation } & \text { February } 28 \
\text { Katt Corporation } & \text { May } 31 \
\text { Rabitt Corporation } & \text { August } 31
\end{array}$$
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.
?

Quizplus · Accepted Answer

Partnership tax returns are filed on Form 1065, which must be filed by the 15th day of the fourth month following the end of the partnership tax year. Therefore, the partnership must use a tax year-end that allows the Form 1065 to be filed by the due date. If the partnership has a deferral resulting from a difference between the partnership tax year and the partners' tax years, the deferral period will be determined by the partner using the latest tax year-end. Therefore, Critter Partnership must use the tax year of the partner that creates the least amount of deferral. Statement I is incorrect because the partnership must use a tax year-end that allows the Form 1065 to be filed by the due date and not any of the three partners' tax year-ends.

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