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amount of debt discharged. See, e.g., Commissioner v. Tufts,
supra. In the case of recourse debt, on the other hand, the
amount realized generally equals the net proceeds received from
the foreclosure sale rather than the entire recourse liability.34
Aizawa v. Commissioner, supra; cf. Chilingirian v. Commissioner,
918 F.2d 1251 (6th Cir. 1990) (amount realized from foreclosure
sale included amount of recourse debt discharged, where the
discharge was closely related to the foreclosure sale), affg.
T.C. Memo. 1986-463 .
Whether the partnership’s debt was nonrecourse is properly
determined at the partnership level in this TEFRA proceeding.
See Hambrose Leasing 1984-5 Ltd. Pship. v. Commissioner, 99 T.C.
298, 308 (1992); sec. 301.6231(a)(3)-1(a)(1)(v), Proced. & Admin.
Regs. Indebtedness is generally characterized as “nonrecourse”
if the creditor’s remedies are limited to particular collateral
for the debt and as “recourse” if the creditor’s remedies extend
to all the debtor’s assets. Raphan v. United States, 759 F.2d
879, 885 (Fed. Cir. 1985). For indebtedness incurred by a
partnership, Treasury regulations that were in effect at relevant
times defined a nonrecourse liability as one with respect to
34 Thus, the characterization of discharged debt as recourse
or nonrecourse may affect the character of any gain or loss on
the transaction. In this proceeding, the parties have presented
no issue as to the character of any gains realized by the
partnership.
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