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The Target Method For Partnership Special Allocations And Why It Should Be Safe-Harbored, Daniel S. Goldberg
The Target Method For Partnership Special Allocations And Why It Should Be Safe-Harbored, Daniel S. Goldberg
Faculty Scholarship
The Treasury Regulations’ concept of “substantial economic effect” is the holy grail of partnership special allocations. Special allocations that have substantial economic effect will come within a safe harbor in the regulations and have assurance that the allocations that are provided in the partnership agreement will be respected. In order for the allocations to come within the substantial economic effect safe harbor, the partnership must (1) maintain capital accounts in accordance with the Treasury Regulations’ standard; (2) provide for liquidation in accordance with capital accounts in all events; and (3) either (a) provide for a deficit restoration obligation (DRO) on …