Partnership Tax Year and Limited Liability Partnerships

• The
  IRC restricts the choices for a partnership‘s tax year to prevent the deferral
  of tax. This causes most partnerships to adopt a calendar year for tax
  reporting. From the e-Activity, create a scenario using a fiscal tax year
  which allows a partnership to defer taxes that meet the requirements of
  Sections 706 and 444 of the IRC.

e-Activity: Go to the Tax Almanac Website, located at , or
use the Internet and Strayer databases to research partnership tax years. Be
prepared to discuss.

• As
  discussed in the text, large accounting firms and other professional firms
  operate as limited liability partnerships (LLPs). Contrast the LLP form of
  business under state laws to the LLP for tax purposes. Next, suggest the
  major reasons why a new entity would choose an LLP over a traditional
  partnership for tax purposes.