704 (b) Income and Allocations Flashcards
1
Q
What are targeted allocations (aka forced allocations)?
A
Under this method, net profits and net losses for each taxable year are allocated so that the balance in each partner’s capital account corresponds, as closely as possible, to the amount such partner would receive as a cash distribution if the partnership were to sell all of its assets for book value, satisfy its liabilities, and distribute the balance under the distribution provisions.
