In: Accounting
Tall Tree LLC was recently formed with the following members:
Name |
Tax Year End |
Capital/Profits % |
Eddie Robinson |
December 31 |
35% |
Pitcher Lenders LLC |
June 30 |
40% |
Perry Homes Inc. |
October 31 |
25% |
What is the least aggregate deferral if the required taxable year-end for Tall Tree LLC is October 31st? (Carry your answer to one decimal e.g., 5.2)
Eddie Robinson, Pitcher Lenders, and Perry Homes Inc. form Tall Tree LLC where members do not have particular tax year-end. Robinson uses calendar year i.e, Dec 31st, whereas for Pitcher Lenders it's June 30th and for Perry Homes, it is Oct 31st.
The Majority interest taxable year rule does not apply because
Hence principal partnership taxable year rule does not apply.Therefore Least aggregate deferral of income method will be used , where tax year for partnership would be chosen and minimum defferal of income is calculated.
Taxpayer | Months of Deferral | Profit % | Deferral Months* Profit percentage |
Eddie Robinson | 10 | 35% | 3.5 |
Pitcher Lenders LLC | 4 | 40% | 1.6 |
Perry Homes Inc. | 0 | 25% | 0 |
Total | 5.1 |
Hence least deferral of income of partners would be 5.1 months.