Mobile Edition

Simple Substantial Economic Effect Regulatory Compliance:an Overview (ACSSE17)

Date:Thursday, December 14, 2017
Time:7:00 PM - 9:42 PM
(Registration at 6:30 PM)
Facility:Webcast or Webinar, Online
CPE Credit:3.0 Technical Business
Instructor: David R. Jenkins
Course Level:Intermediate
Early Bird Price:$99.00 FICPA Members, $129.00 Non-Members


The Internal Revenue Service considers Section 704(b)’s substantial economic effect regulations among the most complex. This course teaches the Treasury Regulations enable simple compliance through (Per Capita: Balances: Ratios) capital account accounting method truncated transitivity, economic effect equivalence, and substantiality’s conclusive presumption. The partnership special allocations public policy mandate is made clear thereby: encourage going concern productivity while discouraging its abandonment.



Lesson 1.

Partnership Special Allocation Substantial Economic Effect: History, Background, and Policy


Lesson 2.

Capital Account Accounting


Lesson 3.

Economic Effect’s Trinity


Lesson 4

Simplified Substantiality Compliance: the Treas. Reg. Section 1.704-1(b)(2)(iii)(c)(2) Conclusive Presumption


Lesson 5.

Partnership Agreement Special Allocation Substantial Economic Effect Provisions


Lesson 6

Crunching Some Numbers: Going Concern Capital Account Maintenance


Lesson 7

Crunching Some Numbers: Liquidation Capital Account Maintenance



  • Recognize whether a transaction is correctly designed as consistent with Congress’s partnership special allocations productivity policies  

  • Recognize when a partnership agreement’s provisions correctly rebut the presumptive Per Capita method for purposes of determining a partner’s interest in the partnership   

  • Recognize the necessary partnership agreement provisions that correctly achieve (Per Capita: Balances: Ratios) capital account accounting method truncated transitivity  

  • Recognize the necessary partnership agreement provisions that correctly provide economic effect trinity’s elements  

  • Recognize the partnership agreement liquidation adjustment provisions necessary to correctly achieve economic effect equivalence

  • Recognize substantiality’s conclusive presumption requires the partnership agreement correctly provide offsetting allocations that, in large part, occur more than five years after the originating allocation  

  • Recognize when a substantial economic effect financial forecast correctly shows there is a reasonable possibility the special allocation will affect substantially the dollar amounts to be received by the partners of the partnership, independent of tax consequences

    Major Topics:

  • The Interrelationship of Congress’s Special Allocations Productivity Policy and Accounting for Income Taxes Financial Accounting Policies  

  • Rebutting the Treasury Regulation’s presumptive Per Capita capital account accounting method  

  • Using (Per Capita: Balances: Ratios) Capital Account Accounting Method Truncated Transitivity to Moot the Insubstantiality Tests  

  • Economic Effect’s Trinity  

  • Economic Effect Equivalence Liquidation Adjustments  

  • The Simplicity of Substantiality’s Conclusive Presumption  

  • Sample Partnership Agreement Special Allocation Substantial Economic Effect Provisions  

  • Creating a Substantiality Reasonable Possibility Showing Financial Forecast

    Who Should Attend:
    CPAs, Attorneys, , Enrolled Agents, Other Tax Professionals

    Participants in this lecture should have some basic understanding of: Partnership capital account accounting, Partnership capital account account methods, and Partnership tax law.

    Advanced Preparation:
    Purchase and read journal article relating to course, and Review the Course Materials.


    If listed below, select the appropriate sessions or options to continue with your purchase.

    Registration Status: CLOSED - Online registration for this course is now closed. Please contact the Member Service Center at (800) 342-3197 if you wish to inquire about registering.