Section 752 Proposed Regulations Regarding Partnership Recourse Liabilities And Rules For Related Persons

On December 13, 2013, the Internal Revenue Service and U.S. Department of the Treasury issued proposed regulations under Section 752 regarding recourse liabilities of a partnership and the special rules for related persons (Proposed Regulations).  The Proposed Regulations provide guidance as to when and what extent a partner is treated as bearing the economic risk of loss (EROL) for a partnership liability when multiple partners bear the EROL for the same partnership liability (overlapping EROL).  The Proposed Regulations also provide guidance as to 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 EROL for that liability) and such partner is related to another partner in the partnership.