What are qualified liabilities?

(6) Qualified liability of a partner defined. A liability assumed or taken subject to by a partnership in connection with a transfer of property to the partnership by a partner is qualified liability of the partner only to the extend –

What are disguised sale rules?

Disguised Sale Rules Defined If the transfer of property and the transfer of money and/or other consideration are made within two years of each other, the transaction is presumed to be a disguised sale unless the facts and circumstances clearly establish that the transfers do not constitute a sale.

What are disguised sales?

A disguised sale transaction occurs when a partnership transfers money or other property to a partner that, in substance, is more properly characterized as a sale of property rather than a partnership distribution.

What are qualified nonrecourse liabilities?

Qualified nonrecourse financing generally includes financing for which no one is personally liable for repayment, that is borrowed for use in an activity of holding real property, and that is loaned or guaranteed by a federal, state, or local government or is borrowed from a “qualified” person.

Are nonrecourse liabilities included in basis?

Nonrecourse liabilities can provide basis for distributions, but generally do not provide basis for purposes of the at-risk rules.

What are distributions subject to section 737?

If a partner who contributed property to a partnership receives a distribution of property other than money from a partnership, the partner recognizes gain (Section 737 gain) equal to the lesser of: the “excess distribution” or. the “net pre-contribution gain.”

What is the difference between recourse and nonrecourse liabilities?

There are two types of debts: recourse and nonrecourse. A recourse debt holds the borrower personally liable. All other debt is considered nonrecourse. In general, recourse debt (loans) allows lenders to collect what is owed for the debt even after they’ve taken collateral (home, credit cards).

Does qualified nonrecourse debt increase tax basis for losses?

For purposes of adjusting at-risk basis, income includes tax-exempt income, and deductions include nondeductible expenses. In a real estate context, an increase of qualified nonrecourse financing increases the taxpayer’s basis.

Does qualified nonrecourse debt add to basis?

In a real estate context, an increase of qualified nonrecourse financing increases the taxpayer’s basis.