In trying to determine ownership interests in a partnership, I am under the impression that you may use "profit" or "capital" interests. Is that correct?

Does that mean that you can choose to calculate ownership based on profits or based on capital? Or would you mix-and-match the two, say by taking the higher of profit or ownership for each partner?

Thanks for any responses or directions to appropriate citations.

Generally, I use the greater of the capital or profit interest for each partner, since this is usually what is used in determining any attribution of outside ownership interests held by the partnership.

Unfortunately, some partnership arrangements are complex as to how specific profits are divided (eg.-capital gains) and in computing this %, I usually coordinate my %'s with their accountant's.

As far as citations, I don't believe there are any regulations concerning this determination.