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How will the partnership taxable income

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Question - ABCD is an equal four person partnership that has a fiscal year ending on June 30. For its fiscal year ending on June 30,2020, ABCD has $732,000 in bottom-line income, $200,000 of which was earned prior to December 1,2019. In addition, ABCD has a capital gain of $80,000 from the sale of stock on may 1 2020. Note that 2020 is a leap year.

On December 7, 2019, A Sells her 25% partnership to P. Both A and P are calendar year taxpayers.

(a) How will the partnership's taxable income for its FYE June 30, 2020 allocable to the 25% interest that was sold by A be Divided between A and P if the partnership uses (1) the interim closing method and the semi-monthly convention, 0r(2) the proration method?

(b) In what calendar year must A report her share of that income?

(c) Would your answer in Part(b) be different if A sold one half of her interest to P and retained the other half?

Reference no: EM132923271

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