Partnership Debt Sharing Under Section 752 (Completed)
Date: Monday, January 25, 2021
Instructor: James R. Hamill
||9:00am Pacific Time
10:00am Mountain Time
11:00am Central Time
12:00pm Eastern Time
||2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC
Section 752 treats an increase in a partner’s share of partnership debt as a contribution of money to the partnership. It also treats a decrease in a share of partnership debt as a deemed distribution of money from the partnership to the partner. The debt share then affects the partner’s basis in his or her interest and can affect the ability to deduct losses and the tax treatment of distributions.
Section 752 is silent with respect to the determination of a partner’s share of debt. In response to a district court case in which a partner was able to successfully argue that a guarantee did not create recourse debt, the Treasury Department was granted legislative authority to write regulations determining the share of partnership debt.
The regulations define recourse and nonrecourse debt, and establish rules by which a return preparer determines each partner’s share of both recourse and nonrecourse debt. These determinations are part of the K-1 tax reporting to the partners each year.
In this two-hour CPE webinar with nationally recognized tax expert and instructor James Hamill, CPA, Ph.D. will explain why Congress first granted authority to Treasury to write regulations to overturn the district court’s decision in Raphan, and how those regulations determine the classification of debt and the determination of member’s shares of debt. You will learn the mechanics and the reporting of partnership liabilities.
Who Should Attend
CPAs, EAs, tax preparers and other tax professionals with responsibility for preparation of partnership tax returns or consulting involving partners and partnerships.
- What is a liability for purposes of Section 752
- How is a recourse liability defined
- How to determine shares of recourse liabilities
- What is a nonrecourse liability
- How to determine shares of nonrecourse liabilities
- What is the distinction between nonrecourse and qualified nonrecourse debt
- Reporting shares of debt on a schedule K-1
- Special tax issues that may need to be addressed
- Recognize and apply what is included as a liability for Section 752 purposes
- Identify the four risk-of-loss scenarios that define recourse debt
- Determine shares of recourse and nonrecourse debt
NASBA Field of Study
Taxes (2 hours)
A basic understanding of partnerships.