Corporate Tax/Partnerships
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Lincoln, inc., Washington, inc, and Adams, inc. form presidential suites partnership on Feb. 15 2010. Now, presidential suites must adopt its required tax year-end. The partners year-ends, profits interts and capital interest are reflected below. Given this information, what tax year-end must Presidential Suites use and what rule requires this year-end?
Year-End Profits Capital
Lincoln, Inc 3/31 35% 30%
Washington, Inc 7/31 30% 40%
Adams, Inc 11/30 35% 30%
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A partnership must adopt the same tax year as that of the partners owning a majority interest (greater than 50%)in partnership profits and capital (www.unclefed.com). And if a majority of the partners do not have the same tax year, the partnership is required to adopt the tax year of all of its principal partners (partners with at least 5% interest in profits or capital) (www.unclefed.com). If the principal partners have different tax years, the partnership, generally is required to use the least aggregate deferral method (www.unclefed.com):
Year End:
3/31 Year End Profit Interest Month of Deferral Interest x Deferral
Lincoln, Inc. 3/31 .35 0 0
Washington, Inc.
7/31 .30 ...
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