Problem $9-33($LO$.5)$

Cerulean, Inc., Coral, Inc., and Crimson, Inc., form the Three Cs Partnership on January $1$ of the current year. Cerulean is a $50\%$ partner, and Crimson and Coral are $25\%$ partners. For reporting purposes, Crimson uses a fiscal year with an October $31$ year$-$end, Coral uses the calendar year, and Cerulean uses a fiscal year with a February $28/29$ year$-$end.

a$.$How is the required taxable year determined?

The partnership's required taxable year is determined under the first of three rules that applies. The Three Cs

cancannot

use the "majority partner" rule,

cancannot

use the "principal partner" rule, and

cancannot

use the "least aggregate deferral" rule.

b$.$If the required taxable year is$,$ for example, October $31,$ what alternative tax years could the new partnership consider? For each statement below select "True" or "False", whichever is applicable.

$$No alternative tax years are available.

TrueFalse

$$If all partners, agree, any tax year may be selected.

TrueFalse

$$The partnership can select July, August, or September.

TrueFalse

$$The partnership can appeal to the IRS to use a natural business year.

TrueFalse