Today, I want to continue looking at the partnership capital account. But before I get into the details, let’s review a few basic points. First, from a tax perspective, partners share the economic benefits and burdens of ownership. That means if a partnership makes money, the partners do too. But if the partnership needs more money to continue as a going concern, the partners will have to contribute additional funds. In addition, the allocations of a partner’s capital account must have “substantial economic effect.” This is a term of art in the tax world. In order to have economic effect, the computations for the partner’s capital account must comply with three requirements. I covered the first last week (Part I). This week, we’ll look at the remaining two. Read More