Question

Which of the following does NOT need to occur for a partnership allocation to have substantial economic effect?
(A) An adjustment must be made in the partner's capital account
(B) Liquidation proceeds must be distributed in accordance with capital accounts
(C) Profits and losses must be allocated to different partners in proportion to their equity contribution
(D) Following the distribution of sale proceeds, partners must be liable to the partnership to restore any deficit in their capital account

Answer

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