LLC-partnerships can allocate depreciation, losses, or credits disproportionately to partners — subject to substantial economic effect.
IRC §704(b) permits partners in LLC-partnerships or LPs to allocate specific items (depreciation, losses, credits) DIFFERENTLY from their overall profit/loss ratio, as long as the allocation has 'substantial economic effect' (capital accounts maintained + liquidations follow capital accounts + qualified income offset). Common use: allocate 99% of depreciation losses to the high-bracket partner who needs the shelter, while economic upside splits per capital. Popular in real estate syndications, film/energy partnerships, and family LLCs.
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Borrow against cash-value life insurance at guaranteed rates.
Deduct 60–80% of working-interest investment in year 1.
Insure your own business risks — premiums are deductible.
Hedge funds + alternative assets inside a tax-free wrapper.
Sell appreciated assets tax-free + get lifetime income + charitable deduction.
Deduct now at FMV, grant to charity later — skip cap gains.
Lock in the $13.6M estate exemption before 2026 sunset.
Transfer appreciation to heirs with near-zero gift tax.