A partnership currently operates on a calendar year. A corporation acquires over 50% ownership and has a fiscal year ending June 30. Can the partnership change to a June 30 year en... A partnership currently operates on a calendar year. A corporation acquires over 50% ownership and has a fiscal year ending June 30. Can the partnership change to a June 30 year end without filing Form 8716? A) No, because June 30 is not a required year end for the partnership. B) Yes, as long as the partnership files Form 1128 and is denied permission by the IRS. C) No, because June 30 is a required year end for the partnership. D) Yes, as long as the partnership files Form 1128.
Understand the Problem
The question is asking whether a partnership can change its year-end from December 31 to June 30 after being acquired by a corporation that has a fiscal year ending June 30, without the need to file Form 8716. It presents four multiple-choice options regarding the conditions under which this change can be made.
Answer
No, because June 30 is not a required year end for the partnership.
No, because June 30 is not a required year end for the partnership.
Answer for screen readers
No, because June 30 is not a required year end for the partnership.
More Information
The partnership cannot change to a June 30 year-end without filing the necessary forms because it does not naturally coincide with the required taxable year, which typically aligns with the partners' tax year or the least aggregate deferral method.
Tips
A common mistake is assuming that a partnership can easily change its fiscal year to match its major corporate partner's fiscal year without considering IRS regulations and required filings.
Sources
- 26 CFR § 1.706-1 - Taxable years of partner and partnership. - law.cornell.edu
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