[accountabergs]

I am looking for some clarification on nonrecourse liabilities. It is my understanding that no other partners have a risk of loss for nonrecourse liabilities, and they are not included in the “At Risk Basis”.

A partner’s at risk amount = capital account + % share of recourse liabilities

correct?

Are nonrecourse liabilities included in another calculation, or not at all?

Thanks

Passed in 2014

FAR- (5/27) 88
REG- (2/20) 70, Rematch: (7/2)83
BEC- (4/2) 85
AUD- (4/24) 87

Using Becker live classes and online materials

"if you get confused, listen to the music play"

[accountabergs]

bumpski

Passed in 2014

FAR- (5/27) 88
REG- (2/20) 70, Rematch: (7/2)83
BEC- (4/2) 85
AUD- (4/24) 87

Using Becker live classes and online materials

"if you get confused, listen to the music play"

[jiaxuanclaire]

I checked on several resources for this, and I think the non-recourse not included in the calculation of the at-risk, basis. But I saw one stated that it will be included in calculations of gain and losses, I am confused. Where is Jeff? haha

BEC: (07/13) 79-->done
AUD: (08/13) 62, (03/14) 68, (11/14)--?
REG: (05/14) 74, (07/14) 72, (10/14) 79-->done
FAR: (08/14) 80-->done

[PurpleK]

That is generally the rule. Note partnership liabilities are extremely complex and there are many exceptions to the rule. I would suggest reading Sections 465, 704(c), 752 and related Regs.

Under the at-risk rules, deductions of losses are limited to the what the taxpayer has at risk in the activity — cash + adjusted basis of contributed property + any amounts borrowed for use in the activity if the taxpayer has personal liability for the borrowed amounts (which can be generally defined as recourse liability or when a partner bears the economic risk of loss if the liability is not satisfied by the partnership).

As for standard basis calculation (not related to at-risk), any increase or decrease to a partner's share of liabilities, including assumptions of liabilities is treated as a contribution or distribution that increases/decreases a partner's basis in the partnership interest. As such, gain is recognized if distribution of cash exceeds the partner's basis.

Partnership basis and at-risk limit on losses are two separate concepts that should not be confused for one another.

[Author]

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