Which requirement must be satisfied in order to specially allocate partnership income or losses to partners?
A) At least one partner must agree to the special allocations.
B) Special allocations must have economic effect.
C) Special allocations must be insignificant.
D) Special allocations must reduce the combined tax liability of all the partners.

Question

Quizplus · Accepted Answer

Special allocations must have economic effect, meaning that they must reflect the actual economic arrangement of the partnership and cannot simply be used to shift tax liability. The other choices are not requirements for special allocations.

Which Requirement Must Be Satisfied in Order to Specially Allocate