Partners A and B form Partnership AB.Partner A contributes $100,000 cash and will manage the operations.Partner B contributes $200,000 cash.They use the funds and the partnership borrows on a non-recourse basis $900,000 to buy a piece of rental real estate.According to the partnership agreement, income and losses will be allocated 50/50, and when the partnership is liquidated, proceeds from a sale of the property (after repayment of any outstanding loans) will be shared 50/50.

Based upon the above facts and circumstances, will the allocations described above be respected as having substantial economic effect? If so, why?If not, why not?