-7-
At-Risk Bases of HBW
For its taxable years ended in July 2000 and 2001, HBW took
into account its proportionate share of LCL’s recourse debt in
computing its at-risk amounts under section 465(b). Respondent
determined that HBW was not entitled to increase its at-risk
amounts on account of that debt. Accordingly, respondent
determined, HBW was not entitled to deduct losses that it claimed
with respect to LCL’s leasing activities because those losses
exceeded the amounts for which HBW was at risk with respect to
those activities.
OPINION
Petitioner argues that the DRO rendered HBW a payor of last
resort as to LCL’s recourse debt for purposes of applying the
at-risk rules of section 465(b).5 Respondent argues that HBW was
not a payor of last resort as to LCL’s recourse debt because the
DRO did not render HBW personally liable as to that debt. We
agree with respondent.
First Subject Year
As to the first subject year, the DRO was included in the
revised operating agreement which resulted from an amendment made
5 Petitioner makes no argument that HBW also may take into
account LCL’s nonrecourse debt when applying those rules. We
deem that issue to have been waived and do not decide it. See
Petzoldt v. Commissioner, 92 T.C. 661, 683 (1989); Burbage v.
Commissioner, 82 T.C. 546, 547 n.2 (1984), affd. 774 F.2d 644
(4th Cir. 1985); Wolf v. Commissioner, T.C. Memo. 1992-432, affd.
13 F.3d 189 (6th Cir. 1993).
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Last modified: March 27, 2008