Reply To: Partnership allocation with capital gains

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#43916
Jarter Gao
Participant

The income and loss allocations should match their capital accounts allocation. All income and loss, including capital gains, should be 50/50.

The IRS will argue to split the capital gains to 50-50 under the substantial economic effect test under IRC Sec. 704 and Treas. Reg. Sec. 1.704-1(b)(2)(ii).