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Simple Substantial Economic Effect Regulatory Compliance:an Overview (ACSSE18)

Date:Wednesday, December 27, 2017
Time:10:00AM - 12:42PM
(Registration at 9:30 AM)
Facility:Webcast or Webinar, Online
CPE Credit:3.0 Technical Business
Course Level:Intermediate
Early Bird Price:Not applicable or see below.


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.