October 14, 2022 2022-1554 Tax Court determines tax consequences when partners leave partnership and take clients In Clark Raymond & Co. PLLC, et al. v. Commissioner, the Tax Court determined the tax consequences of two partners leaving a three-partner partnership to set up their own partnership and taking some clients; the IRS disregarded the partnership's "client distributions." The Tax Court held that (1) the partnership appropriately distributed client-based intangible assets to the two departing partners; (2) because the partnership failed to maintain capital accounts, its special allocations of income to the two partners lacked substantial economic effect and must be reallocated in accordance with their partnership interests; and (3) ordinary income must be allocated to the two departing partners to bring their negative capital accounts up to zero. ——————————————— ATTACHMENT Clark Raymond & Co. PLLC, et al. v. Commissioner 
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