XYZ, LLC, Has Several Individual and Corporate Members

question 80

Multiple Choice

XYZ, LLC, has several individual and corporate members.Abe and Joe, individuals with 4/30 year-ends, each have a 23 percent profits and capital interest.RST, Inc., a corporation with a 6/30 year-end, owns a 4 percent profits and capital interest, while DEF, Inc., a corporation with an 8/30 year-end, owns a 4.9 percent profits and capital interest.Finally, 30 other calendar year-end individual partners (each with less than a 2 percent profits and capital interest) own the remaining 45 percent of the profits and capital interests in XYZ.What tax year-end should XYZ use, and which test or rule requires this year-end?

• A)4/30, principal partners test.
• B)4/30, least aggregate deferral test.
• C)12/31, principal partners test.
• D)12/31, least aggregate deferral test.

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Definitions:

Critical Value

A point on the scale of the test statistic beyond which we reject the null hypothesis; it defines the cutoff point for significance.

Significance Level

A threshold in hypothesis testing that determines the probability of rejecting a true null hypothesis, commonly represented by α.

Degrees of Freedom

A concept in statistics that represents the number of independent values or quantities which can be assigned to a statistical distribution.

Categories

Distinct groups or classes into which data or items can be classified.