The allocation process outlined at ¶289-355 above could, in some circumstances, produce a spurious result whereby the firm has a profit calculated under s. 849 but, in allocating that profit on the basis of the firm’s profit sharing arrangements under s. 850, one or more partners could be allocated an aggregate (or notional) profit in excess of the actual profit made by the firm, whereas the remaining partners would be allocated an aggregate or notional loss. This might arise where, for example, partnership salaries are allocated as a first charge on profits.

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