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Tamara and Nicki, both calendar-year taxpayers, each own a 25% interest in Partnership TNT. Techron, Inc.,...

Tamara and Nicki, both calendar-year taxpayers, each own a 25% interest in Partnership TNT. Techron, Inc., whose fiscal year ends on July 31, 2017, owns a 50% interest in Partnership TNT. Partnership TNT has not established a business purpose for using a different tax year, nor has it made a fiscal year tax-year election. On what date does Partnership TNT’s required tax year end?
March 15, 2017.
April 18, 2017.
July 31, 2017.
December 31, 2017.
Business   Accounting   
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Answer #1

A partnership is generally required to have one of the following tax years.

1. The tax year of a majority of its partners (majority tax year).

2. If there is no majority tax year, then the tax year common to all of the partnership's principal partners (partners with an interest of 5% or more in the partnership profits or capital).

3. If there is neither a majority tax year nor a tax year common to all principal partners, then the tax year that results in the least aggregate deferral of income.

Hence, Partnership TNT’s tax year ends on July 31, 2017

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