Partnership Debt: Allocating Liabilities and Associated Deductions
Recourse vs. Nonrecourse Debt, Inside vs. Outside Basis, Negative Capital Accounts, and Suspended Losses
A live 110-minute CPE webinar with interactive Q&A
This webinar will explain how partnership debt impacts basis and loss deductions for members and partners in LLCs and partnerships. Our panel of pass-through entity experts will discuss how partnership liabilities are categorized, address how debt impacts basis determinations and, hence, loss deductions for partners, and present scenarios examining situations frequently encountered by tax professionals when allocating liabilities.
Outline
- Partnership debt: introduction
- 1001 recourse vs. 752 recourse
- 752 recourse vs. nonrecourse vs. qualified nonrecourse
- Limited liability partnerships vs. other partnerships
- GP vs. LP vs. LLP/LLC
- Recourse liabilities (1.752-2)
- Economic risk of loss (EROL) – atom bomb test
- Types of guarantees
- Bottom-dollar payment obligations
- Bad boy guarantees
- Other
- Partner or related person as lender (1.752-2(c))
- Nonrecourse liabilities
- 3 tier allocation regime (1.752-3)
- Partnership minimum gain and nonrecourse deductions
- Special rules
- No reasonable expectation of payment (1.752-2(k))
- Tiered partnerships
- Person related to more than one partner
- Timing of determination
- Basis, capital accounts & suspended losses
- Effect on basis
- Increase in partner’s share of liabilities
- Decrease in partner’s share of liabilities
- Property subject to a liability
- Netting of increases/decreases in the same transaction
- Capital account effect
- Suspended losses
- Effect on basis
Benefits
The panel will cover these and other critical issues:
- Allocating nonrecourse debt to partners
- Handling problematic issues including negative capital accounts and suspended losses
- How debt impacts partnership minimum gain and nonrecourse deductions
- Identifying arrangements frequently encountered including bottom-dollar guarantees and carveouts
Faculty
Mario Amaya-Lainez, CPA
Director
Citrin Cooperman
Mr. Amaya-Lainez specializes in partnership taxation with a primary focus on partnership restructurings, such as... | Read More
Mr. Amaya-Lainez specializes in partnership taxation with a primary focus on partnership restructurings, such as partnership mergers and acquisitions, partnership incorporations, and leveraged buy-outs. In addition, he has extensive experience serving clients that conduct business operations through partnerships, including tracking and maintaining partnership capital accounts, yearly income allocations, and assisting with estimates of tax distributions. Throughout his career, Mr. Amaya-Lainez has served clients in a wide array of industries, including healthcare, private equity, hedge funds, manufacturing, government contracting, and real estate. He is a frequent author and lecturer on partnership taxation.
CloseMichael Torhan
Partner
EisnerAmper
Mr. Torhan is a Tax Partner in the Real Estate Services Group. He provides tax compliance and consulting services to... | Read More
Mr. Torhan is a Tax Partner in the Real Estate Services Group. He provides tax compliance and consulting services to clients in the real estate, hospitality, and financial services sectors. Mr. Torhan has extensive tax experience in a wide range of real estate transactions, including joint ventures; formation and operation of private equity funds; real estate acquisitions, dispositions, financings, and refinancings; Section 1031 like-kind exchange transactions; and Section 467 lease agreements.
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