On June 12, 20X9, Kevin, Chris, and Candy Corp

question 58

Essay

On June 12, 20X9, Kevin, Chris, and Candy Corp. came together to form Scrumptious Sweets General Partnership. Now, Scrumptious Sweets must decide which tax year-end to use. Kevin and Chris have calendar year-ends and each holds a 35% profits and capital interest. However, Candy Corp. has a September 30th year-end and holds the remaining 30% profits and capital interest. What tax year-end must Scrumptious Sweets adopt and what rule mandates this year-end?

---

Definitions:

Fair Value

The fair market price of an asset, reflecting its current value under normal market conditions.

Excess Land Allocation

The process of assigning a portion of the purchase price of a combined investment in land and building to the land, often when the portion allocated is above the fair value.

Noncontrolling Interest

An ownership interest in a company that is less than 50%, indicating that the holder does not have control over the company's operations.

Book Value

The net value of a company's assets minus its liabilities and intangible assets, often used to estimate a company's net worth.