In the case of a partnership whose partners all use a calendar year,a reason that is acceptable to the IRS for using a tax year ending June 30th would be:
A)The accountant is already overburdened with calendar year tax returns and could not timely file the partnership's return.
B)A December 31st inventory would be required if a calendar year was used,and the employees do not want to work on New Year's Eve.
C)The company's income does not fluctuate a great deal from year to year.
D)The business has a natural business year that ends June 30th.
E)None of the above.

Question

Quizplus · Accepted Answer

The only acceptable reason for a partnership to use a tax year other than the calendar year is if the partnership can demonstrate a natural business year that ends on a date other than December 31st. Since the question states that all partners use a calendar year, options A, B, and C are not valid reasons for using a June 30th tax year. Therefore, the best choice is D, which states that the partnership has a natural business year that ends on June 30th.

In the Case of a Partnership Whose Partners All Use