Patriots Day LLC is a new shop selling gifts for the truly patriotic American. The company's busiest time is the period leading up to July 4th; orders for this period usually produce more than half of the year's income. Of the orders for the Fourth of July celebrations, eighty percent come in the months of May and June. Patriots Day is a partnership for tax purposes. Its partners are Indie Pendant (owning a 25 percent capital and profits interest), a calendar year taxpayer; Free Dome Pendant (Bob's wife, who owns a 20 percent interest), also a calendar year taxpayer; and the Patriots Day Company (which owns a 55 percent interest in capital and profits), a C corporation with a May 31 fiscal year.

What taxable year(s) may Patriots Day elect? Why?

If there is more than one available taxable year, which would be the most tax advantageous? What information might you need to make such a determination?

HINTS Reference IRC706b and IRC 444