January 01, 2017

Deciphering Tax Allocation Provisions in a Partnership Agreement

Philip R. Hirschfeld

A typical real estate limited partnership agreement or limited liability company operating agreement includes provisions dealing with allocations of taxable income, gain, loss, and deductions that can be difficult to decipher. This article provides a brief explanation of the reasons for these tax allocation rules and the content of the basic tax allocation provisions so that a real estate lawyer can better understand and explain to his or her clients what many investors consider a tax morass.

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