ACC565 Week 6 Discussion 1 and 2 1 
ACC565 Week 6 Discussion 1 and 2
Name
Course
University
5/14/2014
Discussion 1
"Partnership Tax Year" Please respond to the following:
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.
Suggest at least one (1) major reason why Congress allowed the exception to the calendar year for partnership tax year elections. Like all businesses and individuals, partnerships are also subjected to tax payment. Tax payment is necessary for the smooth functioning of the government as it provides revenue for its operations. The budget of government is dependent on the amount of taxes collected from public every year. Therefore, it is important that everyone should participate in this process in accordance with the law. Partnerships are taxed under section 1.441-1 which describes all conditions and rules for partnerships in tax payment. Section 706 and 1.706-1 are also helpful in this case. The main issue for partnerships is the taxable year which basically is the year in which they pay their taxes. These sections describe the taxable year of partnerships and give guidelines in accordance to that. Under section 706, partnerships are directed to pay taxes in the year in which majority interest pays taxes. However, this is not applicable to all partnerships. There can be cases in which this is absent and in those cases it has been directed to pay taxes in the year when majority of the partners are paying tax (Freedley, 1883). These are called principal partners. But in cases where principal partners and majority interest are absent then the partnership can pay tax in the year they get the minimum aggregate amount of their deferred income. Another favor given to partnerships by the law
Name
Course
University
5/14/2014
Discussion 1
"Partnership Tax Year" Please respond to the following:
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.
Suggest at least one (1) major reason why Congress allowed the exception to the calendar year for partnership tax year elections. Like all businesses and individuals, partnerships are also subjected to tax payment. Tax payment is necessary for the smooth functioning of the government as it provides revenue for its operations. The budget of government is dependent on the amount of taxes collected from public every year. Therefore, it is important that everyone should participate in this process in accordance with the law. Partnerships are taxed under section 1.441-1 which describes all conditions and rules for partnerships in tax payment. Section 706 and 1.706-1 are also helpful in this case. The main issue for partnerships is the taxable year which basically is the year in which they pay their taxes. These sections describe the taxable year of partnerships and give guidelines in accordance to that. Under section 706, partnerships are directed to pay taxes in the year in which majority interest pays taxes. However, this is not applicable to all partnerships. There can be cases in which this is absent and in those cases it has been directed to pay taxes in the year when majority of the partners are paying tax (Freedley, 1883). These are called principal partners. But in cases where principal partners and majority interest are absent then the partnership can pay tax in the year they get the minimum aggregate amount of their deferred income. Another favor given to partnerships by the law