-24-
account. Again, because the IHCL Restated Agreement does not
contain a deficit makeup provision, THEI would not have been
required to make up the shortfall.
Respondent concludes that the application of the IHCL Restated
Agreement supports the determination made in the FPAA--that Mr.
Manchester, who, at the end of 1991, had the only positive capital
account in IHCL, would have been the only party to receive
liquidation proceeds; accordingly, all the post-June 20, 1991,
income of IHCL must be allocated to him because he is the sole
partner with a positive capital interest in IHCL.
D. Petitioner's Contentions
Petitioner disagrees with respondent's conclusions.
Petitioner contends that respondent has erroneously failed to
include in the deemed liquidation proceeds approximately $7 million
for both 1990 and 1991 as "minimum gain allocations". Petitioners'
argument requires further exploration of the partnership allocation
regulations, specifically as they relate to allocations of
nonrecourse deductions.
1. Partnership Minimum Gain
A nonrecourse debt is one in which the lender, upon the
debtor's default, has as its only recourse the institution of
foreclosure proceedings with respect to the property securing the
debt. (In a nonrecourse debt situation, the lender has agreed that
it will not maintain a collection action against the debtor
personally.) Thus, if the value of the property securing the debt
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