Section 704, Targeted Allocations and the Distribution Waterfall: Overcoming Challenges Absent IRS Guidance

Understanding the Economic Effect Test and How to Allocate Income or Loss Using Targeted Allocations

A live 110-minute CPE webinar with interactive Q&A

Thursday, June 29, 2017
1:00pm-2:50pm EDT, 10:00am-11:50am PDT

Early Registration Discount Deadline, Friday, June 2, 2017

This webinar will provide tax professionals with a review of the key concepts of targeted allocations and the role they play in making valid allocations to partners by partnerships and certain LLCs under Sect. 704(b).


Targeted allocations are not a new concept but are utilized with greater frequency than traditional allocations. The targeted allocations approach may achieve the same outcome as the traditional approach, but it arrives at the allocations differently.

Using targeted allocations, a partnership liquidates in accordance with a negotiated distribution waterfall that reflects exactly the partners’ economic deal. Traditionally, the allocation provisions of partnership agreements relied on IRC 704(b) safe-harbor economic effect regs and provided that income or loss would first be allocated to the partners’ capital accounts. After such allocations, cash or other property would be distributed in proportion to partner capital accounts.

Accounting professionals must understand the potential ramifications of using targeted allocations within the requirements of the Section 704(b) economic effect test, and associated rules that rely on an allocation that has economic effect when making other allocations that cannot have economic effect by their nature (e.g., nonrecourse deductions).

Listen as our panel of tax practitioners who are experienced with targeted allocations and Sect. 704(b) gives you a thorough briefing on this complex area and helps you anticipate partner allocation issues.


  1. Review of partnership allocation rules
  2. Targeted capital accounts vs. liquidating with capital accounts
    1. Layer cake and targeted allocations
  3. Other considerations
    1. Regulatory allocations
    2. Preferred returns
    3. Other


The panel will analyze and tackle these and other relevant topics:

  • “Economic effect” test safe harbor agreements vs. cash-driven agreements
  • Allocating income under either type of agreement
  • Relevant regulatory safe harbors

Learning Objectives

After completing this course, you will be able to

  • Determine the requirements for an allocation to have economic effect
  • Identify when allocations and distributions satisfy the safe harbor provisions
  • Verify that a partner’s distributive distribution satisfies the requirements of IRC 704(b)
  • Identify the advantages or disadvantages of targeted allocations
  • Discern the difference between targeted allocations of nonrecourse debt and recourse debt


Lynn E. Fowler, Partner
Kilpatrick Townsend & Stockton, Atlanta

Mr. Fowler's practice specializes in tax-efficient strategies for a variety of business entity formation, financing, operations and disposition transactions. He has worked with clients frequently on federal income tax credits, and taxable and tax-free M&A transactions.

Amanda Wilson, Partner
Lowndes Drosdick Doster Kantor & Reed, Orlando, Fla.

Ms. Wilson concentrates her practice on federal tax planning and structuring and represents clients in a wide variety of complex federal tax matters, with a particular emphasis on pass-through entities such as partnerships, S corporations and real estate investment trusts. Specifically, she focuses on advising clients on the formation, operation, acquisition and restructuring of pass-through entities.

Registration per Person for Live Event

Additional lines for this conference can be purchased at 25% off. For orders of five or more lines, further discounts will apply and will be automatically reflected in the cart.

Live Webinar $97.00

Includes Early Discount Savings of $50.00 (through 06/02/17)

Live Webinar & CPE Processing $132.00

Includes Live Webinar Early Discount Savings of $50.00 (through 06/02/17)

CPE per Person on Live Event

Continuing Professional Education credit processing is available for an additional fee. CPE processing must be ordered prior to the event. To qualify for CPE you may not listen via the telephone.

This program is eligible for 2.0 CPE credits.

  • Field of Study: Taxes.
  • Level of Knowledge: Intermediate.
  • Advance Preparation: None.
  • Teaching Method: Seminar/Lecture.
  • Delivery Method: Group-Internet (via computer).
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of verification codes announced throughout the presentation.
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of partnership structure, operating agreements and liquidation, including partner capital accounts, allocation and distributions; familiarity with the economic effect test; safe-harbor and non-safe harbor partnership agreements according to IRC 704.

NOTE: CPE credit processing for all attendees must be ordered by 2pm Eastern the day of the program to receive a Certificate of Attendance within 24 hours.


Recorded Event

Includes full event recording plus handouts (available after live webinar).

Note: Self-study CPE and EA credits are not offered on recorded events.

Recorded Webinar Download $97.00
Available 48 hours after the live event

Includes Early Discount Savings of $50.00 (through 06/02/17)

How does this work?

Recorded Audio Download (MP3) $97.00
Available 24 hours after the live event

Includes Early Discount Savings of $50.00 (through 06/02/17)

How does this work?

DVD (Slide Presentation with Audio) $97.00 plus $9.45 S&H
Available ten business days after the live event

Includes Early Discount Savings of $50.00 (through 06/02/17)

How does this work?

Registration Plus Recorded Event

Best value!

Live Webinar & Webinar Download $144.00

Includes Special Savings of $150.00 (through 06/02/17)

Live Webinar & Audio Download $144.00

Includes Special Savings of $150.00 (through 06/02/17)

Live Webinar & DVD $144.00 plus $9.45 S&H

Includes Special Savings of $150.00 (through 06/02/17)


National Registry of CPE Sponsors

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website:

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

Early Registration
Discount Deadline
June 2, 2017
(7 days)

or call 1-800-926-7926

Can't Attend the Live Program?

CPE Credit

Strafford is a NASBA CPE sponsor and our live webinars qualify for CPE credits. They offer you a high quality, cost effective, and convenient CPE option, with no lost travel time or expenses.

or call 1-800-926-7926

EA Credit

Strafford is an IRS approved continuing education provider and this course is approved for 2 enrolled agent (EA) credit hours.

or call 1-800-926-7926

Customer Reviews

I appreciated the flow of the information offered and the ease at which I could follow the handouts.

Larry Bruck

WISS & Company

I purchased the conference a few minutes after it began and the customer service rep was very helpful and got me signed up and logged into the conference very quickly.

Joanna Johnston

Savas Greene & Company

I liked the concentration on specific issues and examples.

Edita Rimalovsky

Komisar Brady & Co.

I loved the tools and handouts. Every CPE class should offer these kind of tools.

Jackie Meyer

Sample and Bailey

The conference was technical, informative and presented at a good pace.

Krystal Ching


or call 1-800-926-7926

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