Do you get partnership basis for nonrecourse debt?

Nonrecourse liabilities can provide basis for distributions, but generally do not provide basis for purposes of the at-risk rules. Under an exception, a partner’s share of partnership debt that meets the definition of qualified nonrecourse financing does generate at-risk basis for that partner.

What is partner nonrecourse debt?

Partner nonrecourse debt or partner nonrecourse liability means any partnership liability to the extent the liability is nonrecourse for purposes of § 1.1001-2, and a partner or related person (within the meaning of § 1.752-4(b)) bears the economic risk of loss under § 1.752-2 because, for example, the partner or …

How is nonrecourse debt allocated to partners?

Generally, excess nonrecourse liabilities are allocated to the partners in proportion to how they share profits. The partnership may specify in the partnership agreement each partner’s share of profits for purposes of allocating excess nonrecourse liabilities.

What is recourse debt in a partnership?

A partnership debt is considered a “recourse” liability to the extent any partner bears the economic risk of loss if the debt comes due and the partnership is unable to satisfy the obligation. A partner’s share of a recourse liability, then, is the share for which that partner bears the economic risk of loss.

What is a non – recourse loan partnership?

Nonrecourse loan. A loan for which no partner or related person bears the economic risk of loss. For example, if a partnership fails to repay a nonrecourse loan, the lender has no recourse against any partner except to foreclose of the assets used to secure the loan.

Do nonrecourse liabilities increase basis?

Does qualified nonrecourse financing increase basis? Nonrecourse liabilities can provide basis for distributions, but generally do not provide basis for purposes of the at-risk rules. Under an exception, a partner’s share of partnership debt that meets the definition of qualified nonrecourse financing does generate at-risk basis for that partner.

What is non recourse debt?

Nonrecourse debt. Nonrecourse debt or a nonrecourse loan (sometimes hyphenated as non-recourse) is a secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable.