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Determine the tax year(s) each of the following S corporations must use. Explain.
1. Will, Dan, and Tom are equal owners of Rheen Corporation, and each has a different fiscal year. Will has a fiscal year that ends April 30, Dan's ends May 31, and Tom's ends November 30.
2. Assume the same facts as in part a, except that Tom and Dan each own a 20% interest in Rheen and Will owns the remaining 60%.
3. Assume the same facts as in part b. Rheen's business is seasonal; the heaviest revenue months are July and August. Revenues for 3 years are as follows:
July and August
12-Month Period
Current year
$90,000
$300,000
1st preceding year
80,000
260,000
2nd preceding year
60,000
230,000
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