- 15 -
other contractual arrangements. It also means that, with regard
to recourse liabilities, the shifting of basis cannot occur
without a concomitant shifting of the underlying risk of economic
loss.
Mr. Forsythe bore the economic risk of loss with regard to
the recourse liability because he personally guaranteed the full
amount of the Nationsbanc loan and had no rights to
“reimbursement, contribution, exoneration or indemnity (or any
similar right)”. See sec. 1.752-2(b)(3)(i), Income Tax Regs.
Pursuant to the related partner exception, Mr. Forsythe and
Indeck Overseas, as common owners of interests in IPO II, may not
be treated as related persons for purposes of all determinations
of economic risk of loss. Therefore, Mr. Forsythe’s economic
risk of loss as guarantor cannot be attributed to Indeck
Overseas, as conceded by petitioner.
Petitioner argues, however, that Indeck Overseas did bear
economic risk of loss for the recourse liability through the
Indeck Energy guaranty. Petitioner argues that Indeck Overseas
can be related to Indeck Energy through Mr. Forsythe for purposes
of determining economic risk of loss. We disagree.
Indeck Overseas is only related to Indeck Energy via its
“relationship” with Mr. Forsythe. See sec. 267(b)(11); sec.
1.752-4(b)(1), Income Tax Regs. The related partner exception
begins with the language “Notwithstanding paragraph (b)(1) of
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011