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Agreement nor the IHCL Restated Agreement meets the alternative
test for economic substance because such agreements fail to provide
a QIO. See supra pp. 14-15. Accordingly, there is no “deemed
obligation” that THEI restore to its capital account its alleged
$3,042,812 share of the decrease in minimum gain allocable to the
disposition of property. Even if THEI had such an obligation, that
obligation would not operate to reduce the amount allocable to THEI
under the minimum gain chargeback. The regulations provide that
such a restoration obligation is performed only “(after taking into
account * * * any changes during such year in partnership minimum
gain and in the minimum gain attributable to any partner
nonrecourse debt)”. Sec. 1.704-1T(b)(4)(iv)(e)(2)(ii), Temporary
Income Tax Regs., supra. (Emphasis added.) In this case, the
antecedent changes in such minimum gain were their total
elimination by operation of the Tufts principle in the partnership
regulations. After such changes, there was no minimum gain, and no
partner could have a share of minimum gain to restore to its
capital accounts.
Substantiality
The comparative liquidation test of section 1.704-
1(b)(3)(iii), Income Tax Regs., is ineffective if the economic
effect of the resulting allocations is “insubstantial” under
section 1.704-1(b)(2)(iii), Income Tax Regs. In general, this
requirement of substantiality requires “a reasonable possibility
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