XYZ, LLC Has Several Individual and Corporate Members

question 103

Multiple Choice

XYZ, LLC has several individual and corporate members. Abe and Joe, individuals with 4/30 year-ends, each have a 23% profits and capital interest. RST, Inc., a corporation with a 6/30 year end, owns a 4% profits and capital interest while DEF, Inc., a corporation with an 8/30 year end, owns a 4.9% profits and capital interest. Finally, thirty other calendar year-end individual partners (each with less than a 2% profits and capital interest) own the remaining 45% 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:

Oceanic Crust

The thin layer of crust that forms the ocean floors, primarily composed of basalt and gabbro, and denser than continental crust.

Uppermost Mantle

The top layer of the Earth's mantle, directly beneath the Earth's crust, involved in tectonic plate movements and magma generation.

Isostasy

The condition of equilibrium, comparable to floating, of the crust resting on the solid mantle.

Equilibrium

A state of balance between opposing forces or actions.