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Partnership Debt Allocations and New IRS Regulations: Minimizing Tax Consequences

Bottom-Dollar Guarantees, Disguised Sales, Recourse and Nonrecourse Debt Allocations

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, February 26, 2020

Recorded event now available

or call 1-800-926-7926

This course will provide tax advisers with a thorough and practical guide to the challenges of allocating recourse and nonrecourse partnership debt, including an analysis of the Treasury regulations issued in October 2019.


Treasury Decisions 9876-7 address how to allocate partnership liabilities and when a partner's obligation results in the economic risk of loss (EROL) under Section 752. Notably, they disregard deficit restoration obligations (DROs) that aren't valid repayment obligations (including most bottom-dollar arrangements) and explain how to allocate liabilities for purposes of disguised sales.

Since additional recourse debt can increase a partner's loss deduction and allow for receipt of higher untaxed distributions, tax advisers must understand how to classify and allocate partnership liabilities.

Even before the issuance of the regulations, practitioners struggled with reconciling allocations in partnership agreements with the requirement that the tax allocation has substantial economic effect under IRC Section 704(b).

Listen as our experienced panel provides a critical look at the newest partnership debt regulations, explains how to allocate partnership recourse and nonrecourse debt, and offers practical guidance on reviewing and structuring current partnership obligations.



  1. Background on Sections 707 and 752
  2. Overview of the newest regulations
    1. Liability allocations
    2. Bottom-dollar guarantees
    3. Disguised sales
  3. The partnership agreement
  4. Examples


This panel will review these and other key issues:

  • Distinguishing recourse from nonrecourse partnership debt
  • Allocating liabilites between partners
  • The impact of the new regulations on common partnership transactions
  • Identifying disguised sales under the newest regulations
  • Steps tax advisers should take in light of the latest regulations


Dance, Glenn
Glenn Dance

Holthouse Carlin & Van Trigt

Mr. Dance has over 35 years of public accounting experience. He specializes in complex partnership taxation and is an...  |  Read More

Mandarino, Joseph
Joseph C. Mandarino

Smith Gambrell & Russell

Mr. Mandarino's practice focuses on corporate, tax and finance law. He is involved with a wide variety of...  |  Read More

Palmer, Kim
Kim Palmer, CPA, MT

Cohen & Company

Ms. Palmer leads the firm’s Partnership Tax Group. She focuses on tax issues primarily relating to the real...  |  Read More

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