Problem - Cameron, an individual, and Totco, Inc., a domestic C corporation have decided to form CT, a California LLC. The new LLC will produce a product that Cameron has recently developed and patented. Cameron and Totco, Inc., will each have a 50% capital and profits interest in the LLC. Cameron is a calendar year taxpayer, while Totco is taxed on July1-June 30 fiscal year. The LLC does not have a "natural business year" and elects to be taxed as a partnership.
a. Determine the taxable year of the LLC under the existing Code and Regulations.
b. Two years after formation of the LLC, Cameron sells half of his interest (25%) to Totco, Inc. Can the LLC retain the taxable year determined in part (a)?