Aug 18, 2026 · 24 min · 9 segments
In episode 59 of How Tax Works, Matt Foreman discusses allocations and distributions, and the requirement that the allocations have Substantial Economic Effect, which is broken into two parts, (i)…
So first off, what is a partnership, right? So, you know, what's in a name that which we call a rose by any other name would smell as sweet.
LLCs generally taxes, partnerships, LPs, general partnerships, limited partnerships, limited liability, limited partnerships.
Watch out for single member entities and watch out for foreign partners and members.
But I always throw that out there because sometimes every so often you'll see a foreign partner and there's interesting rules that kind of deal with that.
You'll see foreign owners owning LLCs, which if you listen to my podcast, you'll know I think it's a bad idea generally.
And people laugh when I say, what is an allocation? It kind of sounds like Jerry Seinfeld, right? Like, what is an allocation anyway? And allocations are essentially what happens when you have income.
that an allocation is how income loss, income gain loss deduction credits are divided between the partners.
So first off, what is a partnership, right? So, you know, what's in a name that which we call a rose by any other name would smell as sweet.
LLCs generally taxes, partnerships, LPs, general partnerships, limited partnerships, limited liability, limited partnerships.
Watch out for single member entities and watch out for foreign partners and members.
But I always throw that out there because sometimes every so often you'll see a foreign partner and there's interesting rules that kind of deal with that.
You'll see foreign owners owning LLCs, which if you listen to my podcast, you'll know I think it's a bad idea generally.
And people laugh when I say, what is an allocation? It kind of sounds like Jerry Seinfeld, right? Like, what is an allocation anyway? And allocations are essentially what happens when you have income.
that an allocation is how income loss, income gain loss deduction credits are divided between the partners.
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