Substantial Economic Effect definition
Substantial Economic Effect. Requirement. Federal tax law permits the members to agree on how the income of the entity will be allocated among them, but requires that this allocation reflect the economic reality of their business arrangement, as tested under complicated rules (i.e. the “substantial economic effect” test under Treasury regulations 1.704-1(b)). Generally, for an allocation to have economic effect, it must be consistent with the underlying economic arrangement of the partners. The partner must bear the economic benefit, or burden, of the allocation. 8 Local counsel to confirm that this complies with local law. TBD whether a different measure of patronage is appropriate. directed, by the Board, to pay an assessment to cover the loss (resulting in a reduction in current tax liability) or the loss will be carried back or forward. The distribution percentages referred to in this section can be changed for a coming Fiscal Year by the Members.
Examples of Substantial Economic Effect in a sentence
Substantial Economic Effect.......................................................
Substantial Economic Effect.......................................
Substantial Economic Effect...........................................................