Partnership Special Allocations Revisited
Santa Clara University - School of Law
August 11, 2012
13 Florida Tax Review 349 (2012)
Special allocations of items of partnership income, gain, loss, and deduction have long created difficulties for the tax law. The paper argues that most such allocations should not be respected for tax purposes because they inappropriately separate the character of partnership items from the partners that are economically entitled to them. The paper suggests that special allocations instead ought to be viewed as transactions in partnership interests between or among the partners themselves. A number of consequences follow. The paper also argues that Treasury's rules for establishing the partners' interests in the partnership when an allocation fails the test for substantiality likely are inconsistent with section 704(b) of the Internal Revenue Code.
Number of Pages in PDF File: 53
Keywords: taxation, partnerships
JEL Classification: H25, K34Accepted Paper Series
Date posted: August 12, 2012 ; Last revised: January 10, 2013
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