A, B, and C Corp. form the ABC partnership. A and B are individual, cash method, calendar
Question:
A, B, and C Corp. form the ABC partnership. A and B are individual, cash method, calendar year taxpayers. C Corp is a small corporation that, over the last three years, has had average annual gross receipts in excess of $30 million. C Corp. is an accrual method taxpayer using a June 30 fiscal year. The partners share profits, losses and capital equally.
1.The ABC partnership must choose a taxable year. If there were no constraints on this choice, what taxable year would expect A to favor? C Corp?
2. What is ABC's “required taxable year” within the meaning of Sec. 444(e)?
3.ABC must also choose a method of accounting. Is it permitted to elect to use the cash method of accounting?
Financial Theory and Corporate Policy
ISBN: 978-0321127211
4th edition
Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri