DESCRIPTION
This module provides an in-depth examination of partnership liabilities under IRC §752, focusing on identifying tax liabilities and distinguishing between recourse and nonrecourse debt. Participants explore how economic risk of loss is determined through regulatory rules, agreements, guarantees, and other relevant arrangements, and apply the §752 regulatory framework to allocate recourse liabilities. The module also walks through the three-step allocation of nonrecourse liabilities under Treas. Reg. §1.752-3(a), including partnership minimum gain and §704(c) considerations. Concepts are reinforced through structured walkthroughs, group discussions, and detailed client-based fact patterns requiring technical analysis and calculations.
LEARNING OBJECTIVES
- Identify when a partnership liability constitutes a liability for tax purposes under IRC §752.
- Distinguish between recourse and nonrecourse partnership liabilities for federal income tax purposes.
- Determine how economic risk of loss is impacted based on items such as local law, agreements, guarantees, indemnifications, and waivers of subrogation.
- Apply the Reg §1.752-2(b)(1) regulatory framework to allocate recourse liabilities among partners.
- Explain the three-step allocation of nonrecourse liabilities under Reg §1.752-3(a)(3).
