Extract to table

The fundamental requirement for the validity of partnership allocations for federal income tax purposes is set forth in Section 704(b) of the Code, which provides that a partner's distributive share of income, gain, loss, deduction, or credit shall be determined by the partnership agreement, provided that the allocation has "substantial economic effect

To satisfy the "economic effect" prong, the partnership agreement must provide for: (i) Maintenance of capital accounts for each partner in accordance with Treasury Regulations § 1

To satisfy the "substantiality" prong of the substantial economic effect test, the allocation must have a reasonable possibility of affecting the dollar amounts to be received by the partners, independent of tax consequences

To the extent the tax allocations deviate from pro rata capital account allocations — as they will in the catch-up and carry tiers — the allocations must nonetheless be supported by corresponding economic entitlements and reflected in the capital account maintenance provisions

Syndication costs must be permanently capitalized

Accordingly, this amount must be permanently capitalized by the Vehicle