- 66 -
which “none of the partners have any personal liability”.35 Sec.
1.752-1(e), Income Tax Regs.; see 1 McKee et al., Federal
Taxation of Partnerships and Partners, par. 8.02, at 8-6 (3d ed.
1997).
Pursuant to the terms of the loan guarantee agreement, DOE’s
recovery on any claim was limited to the partnership’s assets and
to the partners’ interests in those assets. Pursuant to the
indenture of mortgage for the loan guarantee agreement, the
collateral for the debt included all project assets, including
all real or personal property “now owned or hereafter acquired
by” the partnership. Insofar as the record reveals, the
partnership had no significant assets apart from the project
assets that were foreclosed upon. Indeed, pursuant to the
partnership agreement and loan guarantee agreement, the
partnership was not authorized to acquire nonproject assets or to
engage in any business other than the project. After DOE took
control of the project and acquired the project assets, there was
35 In support of his argument that the debt was nonrecourse,
respondent cites, without elaboration, current Income Tax Reg.
sec. 1.752-1(a)(2). This regulation provides that, for purposes
of allocating a partnership’s liabilities among its partners, “A
partnership liability is a nonrecourse liability to the extent
that no partner or related person bears the economic risk of loss
for that liability”. These regulations are generally effective
for liabilities incurred after Dec. 28, 1991. Sec. 1.752-5(a),
Income Tax Regs. The predecessor temporary regulations, which
were similar to the final regulations in this regard, were
generally effective for liabilities incurred on or after Jan. 30,
1989. T.D. 8274, 1989-2 C.B. 101. Accordingly, the regulations
cited by respondent were not in effect at any time relevant to
this case.
Page: Previous 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 NextLast modified: May 25, 2011