Tall Tree LLC was recently formed with the following members: Name Tax Year End Capital/Profits %...

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)

Solutions

Expert Solution

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

Each partner uses a different taxable year.
None of the partners own more 50% of capital & profits of the partnership.

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.

ekkarill92 answered 1 year ago

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