Which of the following statements regarding the process for determining a partnership's tax year-end is true?
A) Only the partners' profits interests are relevant when determining if a partnership has a majority interest taxable year.
B) Under the principal partners test, a principal partner is defined as a partner having an interest of 3% or more in the profits or capital of the partnership.
C) The least aggregate deferral test utilizes the partners' capital interests to measure the amount of aggregate deferral.
D) A partnership is required to use a calendar year-end if it has a corporate partner.
E) None of these is true.

Question

Quizplus · Accepted Answer

Only the partners' profits interests are relevant when determining if a partnership has a majority interest taxable year is false because a group of partners with the same year-end must hold more than 50% of the partnership's profits and capital to have a majority interest taxable year. Under the principal partners test, a principal partner is defined as a partner having an interest of 3% or more in the profits or capital of the partnership is false because a principal partner must have an interest of 5% or more in the profits or capital of the partnership. The least aggregate deferral test utilizes the partners' capital interests to measure the amount of aggregate deferral is false because profit interests rather than capital interests are used in calculating the amount of aggregate deferral. A partnership is required to use a calendar year-end if it has a corporate partner is false because a partner's entity type has no bearing on the partnership's required year-end.

Which of the Following Statements Regarding the Process for Determining