Snitch of the following will not allow a special allocation to be consider as su

Question

Snitch of the following will not allow a special allocation to be consider as substantial? A the special allocation is considered to be a pro Rita distribution B the special allocation is not considered to be a shifting of transitory allocation C the special allocation is provided for in the partnership agreement D the special allocation violates the overall tax sffectnrule
Snitch of the following will not allow a special allocation to be consider as substantial? A the special allocation is considered to be a pro Rita distribution B the special allocation is not considered to be a shifting of transitory allocation C the special allocation is provided for in the partnership agreement D the special allocation violates the overall tax sffectnrule
A the special allocation is considered to be a pro Rita distribution B the special allocation is not considered to be a shifting of transitory allocation C the special allocation is provided for in the partnership agreement D the special allocation violates the overall tax sffectnrule

Explanation / Answer

Option d) is the answer.

In order to determine whether special allocation is above board the IRS looks for special economic effect. It reflects actual economic situation of its member rather than artificial attempt to shift tax liability in an advantageous way. Therefore , the situation which does not allow special allocation to be substantial is when it violates the overall tax sffectnrule.

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