Question 1. [LO 3]{Research} Ryan, Dahir, and Bill have operate

1. [LO 3]{Research} Ryan, Dahir, and Bill have operated Broken Feather LLC for the last four years using a calendar year-end. Each has a one-third interest. Since they began operating, their busy season has run from June through August, with 35 percent of their gross receipts coming in July and August. The members would like to change their tax year-end and have asked you to address the following questions:

a. Can they change to an August 31 year-end and, if so, how do they make the change? {Hint: See Rev. Proc. 2002-38, 2002-1 CB 1037.}

b. Can they change to a September 30 year-end and, if so, how do they make the change?{Hint: See §444.}

2. [LO 3] {Research}Ashlee, Hiroki, Kate, and Albee LLC each own a 25 percent interest in Tally Industries LLC, which generates annual gross receipts of over $10 million. Ashlee, Hiroki, and Kate manage the business, but Albee LLC is a nonmanaging member. Although Tally Industries has historically been profitable, for the last three years losses have been allocated to the members. Given these facts, the members want to know whether Tally Industries can use the cash method of accounting. Why or why not? {Hint:See § 448(b)(3)}

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3. [LO 4] Turtle Creek Partnership had the following revenues, expenses, gains, losses, and distributions:

Sales revenue $40,000

Long-term capital gains $2,000

Cost of goods sold ($13,000)

Depreciation – MACRS ($3,000)

Amortization of organization costs ($1,000)

Guaranteed payments to partners for general management ($10,000)

Cash distributions to partners ($2,000)

Given these items, what is Turtle Creek’s ordinary business income (loss) for the year?

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