partnership loss

[fredcrook]

If there is a partnership agreement which specifies profit shareing ratio, but does not specify loss sharing ratio, can you assume that the loss share ratio is the same as the profit share ratio or do the partnership act rules apply? Is there any case law?

[bryan]

This is, unfortunately, another of the grey areas in tax and accountancy.<BR><BR>Strictly, if there is no agreement about losses, the Partnership Act would be the `fall back` for allocating losses. Most accountants would use the profit share ratio to apportion losses. The Revenues view is that losses be apportioned according to any agreement the partners may have, from time to time (as per the Act)<BR><BR>The reality is that, for tax purposes, the IR will accept any apportionment of losses including a claim designed to enable losses be used in the most efficient manner.