Chapter 13
Ch. 13: Question 31
The following accounting period options are:
a. Newly organized C corporation may select any tax year and can differ from the
shareholders.
b. Sole proprietorships must use the same period for business reporting as they
use for personal purposes.
c. Partnerships must use same tax year as that of its partners who have a majority
interest. Since more information was not given, the following could also apply:
If partners owning a majority interest have different tax years, partnership
must adopt same tax year as that of its principal partners.
Or, partnership must use a year that results in least aggregate deferral of
income to partners.
Also we do not know how long they have had the company, but if the natural
business year pattern were to apply, it would exist when the taxpayer receives
25% or more of its gross receipts in last two months of the selected tax year,
and this pattern must repeat for three consecutive years. (IRS approval is
automatic.)
d. S corporations are generally required to be a calendar year. Also we do not
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- Accounting, Options, Generally Accepted Accounting Principles, Goods Sold, FIFO and LIFO accounting, Wash Company
