Hi Lane, did you receive my question?
Sure, any partner's share of partnership income, gain, deduction, loss or credit is set by the partnership agreement (which could actually even be oral) ... (although that could cause some evidentiary problems) ... 704(a) lets partners choose how these things re allocated
So their partnership is setup that their % of ownership and % of profit/loss is 30/30/30/10, the 10% member is passive. They generated a large loss and the active members each received 30% of this loss, but I'm worried since the 3 active members only contributed $50 each and are getting $4,000 in loss allocated to them. Is this really correct?
No, it's correct ... capital accounts are for partnership accounting not for the tax books
thanks so much Lane, you're the best :)