TAX2511. Allocation of Partnership Liabilities

Section 752 allows a partner to increase their outside basis in a partnership by the partner's share of the partnership's liabilities. Although this is a taxpayer-friendly rule, this area of the law is often misunderstood, as practitioners must be able to differentiate between two different definitions of "nonrecourse" and "recourse" liabilities before those liabilities can be properly allocated. In this session, Tony Nitti will explain the different definitions of nonrecourse and recourse liabilities and how those differences drive a proper allocation of partnership liabilities.

Learning Objectives:

• Identify the difference between "nonrecourse" and "recourse" liabilities for both state law and tax law purposes. 
• Recognize the appropriate methods for allocating nonrecourse and recourse liabilities among partners. 
• Recognize the appropriate methods for allocating nonrecourse and recourse liabilities among partners.