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

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?

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