About the Course
Introduction
This webinar will explain how partnership debt impacts basis and loss deductions for members and partners in LLCs and partnerships. Our panel of pass-through entity experts will discuss how partnership liabilities are categorized, address how debt impacts basis determinations and, hence, loss deductions for partners, and present scenarios examining situations frequently encountered by tax professionals when allocating liabilities.
Description
One of the most complicated components of partnership returns is understanding partnership liabilities and how liabilities impact a partner's share of partnership losses and outside basis. At the same time, tracking and recording partnership debt is critical to allocating losses to partners.
Partnership debts are classified as recourse, nonrecourse, and qualified nonrecourse liabilities. As defined by the IRC, a liability is recourse to "the extent a partner or related person bears the economic risk of loss for the liability." In contrast, a debt is nonrecourse if no partner bears a risk of economic loss. Qualified nonrecourse liabilities are liabilities that are nonrecourse but, among other requirements, are secured by qualifying real estate. Qualified nonrecourse liabilities increase a partner's outside at-risk basis.
Since debt allocations increase a partner's outside basis and can similarly increase a partner's loss deduction, several problematic scenarios arise for tax practitioners. When debt exceeds the basis of property in a partnership, minimum gain can be triggered, which at times requires special allocations of such debt and corresponding losses. Losses can be suspended if a partner does not have sufficient outside at-risk basis. Partnership advisers must grasp the rules concerning partnership debt allocations to report and deduct partners' losses correctly.
Listen as our authoritative panel of federal taxation experts breaks down the complexities of partnership debt allocations.
Presented By
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Mr. Amaya-Lainez specializes in partnership taxation with a primary focus on partnership restructurings, such as partnership mergers and acquisitions, partnership incorporations, and leveraged buy-outs. In addition, he has extensive experience serving clients that conduct business operations through partnerships, including tracking and maintaining partnership capital accounts, yearly income allocations, and assisting with estimates of tax distributions. Throughout his career, Mr. Amaya-Lainez has served clients in a wide array of industries, including healthcare, private equity, hedge funds, manufacturing, government contracting, and real estate. He is a frequent author and lecturer on partnership taxation.
Mr. Desalvo is a Principal in KPMG’s National M&A Tax practice and is based in the firm’s Chicago office, specializing in private equity mergers and acquisitions deal work, including partnership and corporate tax matters, structure consultation on public equity offerings, and general deal management. He is also a founder of KPMG’s Partnership Transactions Group, which focuses on tax and structuring consultation related to a variety of complex partnership transactions. Mr. Desalvo has experience working with leading private equity investment firms and their portfolio companies and assists his clients throughout all stages of transactions including acquisition structuring, execution, post-closing integration, and divestiture planning. His transaction execution experience includes evaluation of tax risk factors, availability of tax attributes (e.g., basis step-ups, net operating losses, tax credits, etc.), transaction structuring and exit planning, including umbrella partnership C corporation ("Up-C") and synthetic master limited partnership yield vehicles ("YieldCo") planning for initial public offerings.
Mr. Massey is a Senior Manager, Mergers and Acquisitions at KPMG US. He holds a Master of Laws (LL.M.) focused in Tax Law/Taxation from New York University School of Law.
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BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.
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BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
Date + Time
- event
Wednesday, September 23, 2026
- schedule
1:00 PM ET/10:00 AM PT
I. Partnership debt: introduction
A. 1001 recourse vs. 752 recourse
B. 752 recourse vs. nonrecourse vs. qualified nonrecourse
II. Limited liability partnerships vs. other partnerships
A. GP vs. LP vs. LLP/LLC
III. Recourse liabilities (1.752-2)
A. Economic risk of loss (EROL) – atom bomb test
IV. Types of guarantees
V. Bottom-dollar payment obligations
VI. Bad boy guarantees
A. Other
B. Partner or related person as lender (1.752-2(c))
VII. Nonrecourse liabilities
A. 3 tier allocation regime (1.752-3)
B. Partnership minimum gain and nonrecourse deductions
VIII. Special rules
A. No reasonable expectation of payment (1.752-2(k))
B. Tiered partnerships
C. Person related to more than one partner
D. Timing of determination
IX. Basis, capital accounts & suspended losses
X. Effect on basis
XI. Increase in partner’s share of liabilities
XII. Decrease in partner’s share of liabilities
XIII. Property subject to a liability
A. Netting of increases/decreases in the same transaction
B. Capital account effect
C. Suspended losses
The panel will cover these and other critical issues:
- Allocating nonrecourse debt to partners
- Handling problematic issues including negative capital accounts and suspended losses
- How debt impacts partnership minimum gain and nonrecourse deductions
- Identifying arrangements frequently encountered including bottom-dollar guarantees and carveouts
Learning Objectives
After completing this course, you will be able to:
- Identify common debt arrangements and guarantees including bad boy guarantees
- Recognize tips for determining and allocating debt to partners
- Ascertain differences between inside and outside debt
- Decide when partner loss deductions are suspended
- Field of Study: Taxes
- Level of Knowledge: Intermediate
- Advance Preparation: None
- Teaching Method: Seminar/Lecture
- Delivery Method: Group-Internet (via computer)
- Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
- Prerequisite:
Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and their respective partners and shareholders.
BARBRI, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.
BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
BARBRI CE webinars-powered by Barbri-are backed by our 100% unconditional money-back guarantee: If you are not satisfied with any of our products, simply let us know and get a full refund. Contact us at 1-800-926-7926 .
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