Cano' Corn LLC produces and sells baseball gloves and other sports equipment. A seasonal business, it earns most of its profits during the summer months and has a tax year ending September 30. For its year ended September 30, year 1, the company has taxable income of $96,000. Bud Harrelson, an individual with a tax year ending on December 31, owns a 20% interest in Can o' Corn. On December 31, year 1, Bud sells one-half of his interest to a third party. Assume that the company will have the same taxable income for its year ending September 30, year 2, that it had in the previous year, and that it will earn $12,000 of such income in the three-month period ending December 31, year 1. The company is treated as a partnership for tax purposes and its operating agreement does not specify an allocation method under section 706(d). Ignoring any gain or loss from the sale of his interest, what amount of the company's taxable income does Bud include in his return for his taxable year ending December 31, year 1? a).$2,400 b).$19,200
Cano' Corn LLC produces and sells baseball gloves and other sports equipment. A seasonal business, it earns most of its profits during the summer months and has a tax year ending September 30. For its year ended September 30, year 1, the company has taxable income of $96,000. Bud Harrelson, an individual with a tax year ending on December 31, owns a 20% interest in Can o' Corn. On December 31, year 1, Bud sells one-half of his interest to a third party. Assume that the company will have the same taxable income for its year ending September 30, year 2, that it had in the previous year, and that it will earn $12,000 of such income in the three-month period ending December 31, year 1. The company is treated as a partnership for tax purposes and its operating agreement does not specify an allocation method under section 706(d). Ignoring any gain or loss from the sale of his interest, what amount of the company's taxable income does Bud include in his return for his taxable year ending December 31, year 1?
a).$2,400
b).$19,200
c).$20,400
d).$21,600
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