This year, HPLC, LLC was formed by H Inc., P Inc., L Inc., and C Inc. Each member had an equal share in the LLC's capital. H Inc., P Inc., and L Inc. each had a 30% profits interest in the LLC with C Inc. having a 10% profits interest. The members had the following tax year-ends: H Inc. [1/31], P Inc. [5/31], L Inc. [7/31], and C Inc. [10/31]. What tax year-end must the LLC use?
A) 1/31.
B) 5/31.
C) 7/31.
D) 10/31.

Question

Quizplus · Accepted Answer

HPLC, LLP does not have a majority interest taxable year and the principal partners do not all have the same year-end. Thus, the least aggregate deferral test must be performed to determine what accounting period the partnership should use. The computations required to perform the least aggregate deferral test are shown in the table below:
 
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This Year, HPLC, LLC Was Formed by H Inc