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one requirement for the allocation to meet the primary economic effect test of the partnership agreement involves the capital accounts of the partners. The partners

one requirement for the allocation to meet the primary economic effect test of the partnership agreement involves the capital accounts of the partners. The partners must maintain their capital accounts according to the regulations. This rule is designed to ensure capital accounts clearly show the economic arrangements of the partners. Explain the potential issues that would result if the economic arrangements were not reflected in the capital accounts.

This is for advanced federal taxation class

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