Sweeping Section 752 Rule Changes for Recourse and Nonrecourse Partnership Liability Allocation

Incorporating New Net Value, Bottom-Dollar, Transition Rules and More

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

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Conducted on Wednesday, April 2, 2014

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Course Materials

This CLE course will provide tax counsel with techniques to determine allocation of recourse and nonrecourse liabilities in light of new, coming IRS regulations. The panel will review the impact of the revisions for structuring partnership transactions and agreements, including new net value, bottom-dollar guarantee, transition rules and more.


On Jan. 29, 2014, the IRS made substantial changes to Section 752 in proposed regulations that will impact how both partnership recourse and nonrecourse liabilities are allocated. The new regulations will be a dramatic departure from current law. 

For recourse liabilities, one of the major changes is that the regulations restrict the ability of taxpayers to structure debt financed distributions by partnerships in which the distributee partner guarantees a bottom portion of a partnership liability.  

The Treasury regulations also greatly affect nonrecourse liabilities. Pursuant to the proposed changes, allocations must take place in accordance with a partner’s liquidation value percentage. Finally, the biggest difference from existing law is the elimination of transition rules with respect to nonrecourse debt. Counsel should anticipate the impact of the new proposed regulations and include those considerations in partnership transactions and when drafting agreements.

Listen as our experienced panel carefully reviews the allocations of recourse and nonrecourse liabilities under current law, explains the substantial variances of the new regs from the current regime, and offers best practices to incorporate those changes into the many formerly routine partnership transactions and agreements.



  1. Overview of allocations of recourse and nonrecourse liabilities under current law
  2. Recourse liabilities under the proposed regulations
  3. Nonrecourse liabilities under the proposed regulations
  4. Issues
    1. Net value requirement
    2. Elimination of bottom-dollar guarantees
    3. Requiring payment for providing a guarantee
    4. Transition rules
  5. Best practices for changes to partnership agreements


The panel will review these and other key questions:

  • What changes will the proposed regulations make to the allocation of recourse and nonrecourse liabilities?
  • How do the changes compare to the current regime? How will they affect future transactions and partnership agreements?
  • What steps must be taken now to prepare for the changes proposed in the IRS regulations?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.


Gale E. Chan
Gale E. Chan

McDermott Will & Emery

Ms. Chan focuses her practice on federal and international tax matters involving partnerships, LLCs and corporations....  |  Read More

Robert A.N. Cudd
Robert A.N. Cudd

Senior Partner

Mr. Cudd advises both domestic and foreign entities on tax-efficient structures as well as on transactions between the...  |  Read More

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