Regs. address partnership recourse liabilities, related-party rules

The IRS issued final regulations (T.D. 10014) that amend existing regulations under Sec. 752 relating to a partner’s share of a recourse partnership liability and the rules for related persons, which finalize (with certain modifications) proposed regulations (REG-136984-12) issued in 2013.

The regulations provide guidance as to when and to what extent a partner is treated as bearing the economic risk of loss for a partnership liability when multiple partners bear the economic risk of loss for the same partnership liability (overlapping economic risk of loss).

In addition, the regulations provide guidance when a partner has a payment obligation with respect to a liability or makes a nonrecourse loan to the partnership (and no other partner bears the economic risk of loss for that liability) and such partner is related to another partner in the partnership.

The regulations are effective on Dec. 2, 2024.

— James A. Beavers, CPA, CGMA, J.D., LL.M., is the JofA‘s and The Tax Adviser‘s tax technical content manager. To comment on this article or to suggest an idea for another article, contact Neil Amato at Neil.Amato@aicpa-cima.com.