§206. Taxable years of partner and partnership

A. Year in which partnership income is includible. In computing the taxable income of a partner for a taxable year, the inclusions required by R.S. 47:202 and R.S. 47:207C with respect to a partnership shall be based on the income, gain, loss, or deduction of the partnership for any taxable year of the partnership ending within or with the taxable year of the partner.

B. Adoption of taxable year.

(1) Partnership's taxable year. The taxable year of a partnership shall be determined as though the partnership were a taxpayer. A partnership may not change to, or adopt, a taxable year other than that of all its principal partners unless it establishes, to the satisfaction of the collector, a business purpose therefor.

(2) Partner's taxable year. A partner may not change to a taxable year other than that of a partnership of which he is a principal partner unless he establishes, to the satisfaction of the collector, a business purpose therefor.

(3) Principal partner. For the purpose of this Subsection, a principal partner is a partner having an interest of 5 per cent or more in partnership profits or capital.

C. Closing of partnership year.

(1) General rule. Except in the case of a termination of a partnership and except as provided in Subsection C(2) of this Section the taxable year of a partnership shall not close as the result of the death of a partner, the entry of a new partner, the liquidation of a partner's interest in the partnership, or the sale or exchange of a partner's interest in the partnership.

(2) Partner who retires or sells interest in partnership.

(a) Disposition of entire interest. The taxable year of a partnership shall close only:

(i) with respect to a partner who sells or exchanges his entire interest in a partnership, and

(ii) with respect to a partner whose interest is liquidated, except that the taxable year of a partnership with respect to a partner who dies shall not close prior to the end of the partnership's taxable year.

Such partner's distributive share of items described in R.S. 47:202 A for such year shall be determined, under regulations prescribed by the collector, for the period ending with such sale, exchange, or liquidation.

(b) Disposition of less than entire interest. The taxable year of a partnership shall not close (other than at the end of a partnership's taxable year as determined under Subsection B(1) of this Section with respect to a partner who sells or exchanges less than his entire interest in the partnership or with respect to a partner whose interest is reduced, but such partner's distributive share of items described in R.S. 47:202 A shall be determined by taking into account his varying interest in the partnership during the taxable year.

Amended by Acts 1958, No. 441, §1.