- 13 -
liability to contribute certain amounts toward the partnership's
recourse liabilities in the event the partnership's assets are
insufficient to satisfy the outstanding liabilities, and if the
limited partner has no right of reimbursement if constrained to
make up the difference. Gefen v. Commissioner, 87 T.C. 1471
(1986); Abramson v. Commissioner, 86 T.C. 360 (1986); Smith v.
Commissioner, 84 T.C. 889 (1985), affd. without published opinion
805 F.2d 1073 (D.C. Cir. 1986).
Accordingly, our determination in this instance concerns the
limited partners' personal liability with respect to the payment
of partnership recourse liabilities derived from the investor
notes that were contributed to the partnerships. Respondent
contends that the limited partners became obligated to Admiral
due to the partnerships' failure to meet the terms of the various
loans from the lenders. In turn, the limited partners were
either unable or refused to meet their obligations as delineated
in the investor notes. Therefore, respondent argues that, in
1989, constructive distributions occurred as a result of the
Settlement Agreement between the limited partners, the
partnerships, and Admiral. In particular, respondent cites the
language of the Settlement Agreement which provided that the
investor notes contributed by the limited partners would be
returned to the investors and never be enforced against the
limited partners themselves. On the other hand, petitioners
argue that the investor notes were not liabilities, but, rather,
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011