Determine the taxable year of the LLC

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Problem - Barney, an individual, and Aldrin, Inc., a domestic C corporation, have decided to form BA LLC. The new LLC will produce a product that Barney recently developed and patented. Barney and Aldrin, Inc., will each own a 50% capital and profits interest in the LLC. Barney is a calendar year U.S. taxpayer, while Aldrin, Inc., uses a July 1-June 30 fiscal year. The LLC does not have a "natural business year" and elects to be taxed as a partnership.

Required -

a. Determine the taxable year of the LLC under the Code and Regulations.

b. Two years after formation of the LLC, Barney sells half of his interest (25%) to Aldrin, Inc. Can the LLC retain the taxable year determined in part (a)? Why or why not?

Reference no: EM132663362

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