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so lets continue along with our substantial economic effect problems this is problem three twizzlers general partnership was formed several years ago when strawberry and cherry calendar individuals contributed only cash to business the partnership agreement satisfies the three basic requirements of the economic effect test of reg 1.704-1b to too little eyes b twizzlers among other assets owns a portfolio of municipal bonds and corporate bonds with a variable rate of interest at the beginning of last year each investment had a value of one thousand dollars and each was expected to yield approximate income of sixty dollars twizzlers had net operating income from its business of three hundred dollars for the year how will the tax exempt and taxable interest be allocated to the partners if the partnership agreement provides the following so weve got some different circumstances were going to go through each of those but lets just understand whats going on here so weve got two partn