Partnership Special Allocations Revisited

53 Pages Posted: 12 Aug 2012 Last revised: 10 Jan 2013

See all articles by David Hasen

David Hasen

University of Florida Levin College of Law

Date Written: August 11, 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.

Keywords: taxation, partnerships

JEL Classification: H25, K34

Suggested Citation

Hasen, David, Partnership Special Allocations Revisited (August 11, 2012). 13 Florida Tax Review 349 (2012), Available at SSRN: or

David Hasen (Contact Author)

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

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