In most circumstances it will be easy to see when there is a
qualifying change in a partner’s share in the profits or
losses of the business.
The relevant percentage share is the percentage share in the
profits or losses of the business for tax purposes. Typically the
allocation of profits or losses will be on a simple percentage
basis so that a partner will be entitled to, say, 50% of all
profits or losses. If a partner entitled to 50% of the profits or
losses agrees to take only a 10% share there will be a fall of 40%
fall and a qualifying change will take place. If a partner entitled
to 50% of the profits or losses decides to leave the partnership
then there will be a fall of 50% and a qualifying change will take
place.
