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ARTICLE · 24 MARCH 2016

The IRS Releases CCA 201606027

McDermott Will & Emery
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Below is a basic description of the rules regarding the allocation of partnership liabilities among partners and a summary of the 2016 CCA.

United StatesTax
Levi Kahn
Levi Kahn
Patrick McCurry
Patrick McCurry
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On February 5, 2016, the Internal Revenue Service (IRS) released Chief Counsel Advice 201606027 (the 2016 CCA) in which the IRS concluded, among other things, that guarantees by a partner of a partnership's liabilities that could only be called by the partnership's lenders in certain narrow circumstances (commonly referred to as "nonrecourse carve-outs" or "bad boy" guarantees) caused the guaranteed liabilities to be treated as "recourse liabilities" allocable solely to the guarantor partner under Treasury Regulation § 1.752-2.

Below is a basic description of the rules regarding the allocation of partnership liabilities among partners and a summary of the 2016 CCA.

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