### Question
How is the "qualified allocation" defined?


### Answer
The term **qualified allocation** is defined in *26 U.S.C. § 168* as follows -

> any allocation to a tax-exempt entity which—



(i) is consistent with such entity's being allocated the same distributive share of each item of income, gain, loss, deduction, credit, and basis and such share remains the same during the entire period the entity is a partner in the partnership, and



(ii) has substantial economic effect within the meaning of section 704(b)(2)

#### Citation:
  - *26 U.S.C. § 168*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter B-Computation of Taxable Income > PART VI-ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS**

