@Rick19744, thanks for the thoughtful response. I can be more concrete: under 1.704-1(b)(1), allocations in a partnership agreement are respected if they (1) have SEE, (2) are consistent with PIP, or (3) follow other rules not relevant here.
Let's say that A and B form a partnership. A puts in business X, and B puts in business Z. The businesses have equal values. Under the partnership agreement, A will receive all distributions, operating and liquidating, with respect to X, and B will receive the same from Z. A runs X, B runs Z, et cetera, such that the businesses are economically siloed. The partnership agreement says that allocations of all tax items will be 50-50 between A and B. The partnership allocations do not have SEE under either test.
In year 1, X has $60 of income, and Z has $40 of income. The partnership distributes $60 to A and $40 to B. The partnership allocates taxable income $50 to A and $50 to B. The allocation is not consistent with PIP, based on the factors relevant to the facts and circumstances test in 1.704-1(b)(3). Taxable income should be reallocated under PIP, $60 to A and $40 to B. Had the partnership agreement said, all taxable income from X is allocated to A and all income from Z is allocated to B, then the allocations *would* be consistent with PIP, and they *would* be respected by IRS.
Bottom line: you absolutely can have a situation under PIP where partners are allocated all tax items from specific businesses conducted by a partnership. But, it depends on the specific facts and circumstances. Note that, in my example, if the allocations complied with SEE (and they could, just not under the facts I outlined), then the 50-50 split in taxable income *would* be respected by IRS, even if, say, operating distributions were 60-40.
Another brief point: DROs and QIOs aren't used to "get around the SEE rules." They are part of the "economic effect" prong of SEE in -2(b)(2)(ii)(b) and (d). So you'd need to have one or the other to be under one of the two tests.
If you disagree, I'd love to hear what you think and your reasoning. Overall, I absolutely agree that professional advice is needed, but it's not accurate that the poster's proposed allocation always will fail to be respected. (I would mention series LLCs as a possible--and possibly cheaper--alternative to the partnership rules, however.)
