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taxpayer also is at risk for amounts borrowed for use in the
activity to the extent that the taxpayer is “personally liable
for the repayment of such amounts” or to the extent that the
taxpayer has pledged property, other than the property used in
the activity, as security for such borrowed amounts. A taxpayer
is not at risk with respect to amounts protected against loss
through nonrecourse financing, guaranties, stop loss agreements,
or other similar arrangements. See sec. 465(b)(4). The mere
fact that a debt of a partnership (or similar entity) is payable
in a later year by the partner does not necessarily mean that the
partner must exclude the amount of that debt from the computation
of the partner’s at-risk amount with respect to the partnership.
See Melvin v. Commissioner, 88 T.C. at 73-74.
This case is appealable to the Court of Appeals for the
Sixth Circuit. That court has analyzed the at-risk provisions of
section 465 in the setting of leases in three primary opinions;
namely, Pledger v. United States, 236 F.3d 315 (6th Cir. 2000),
Martuccio v. Commissioner, 30 F.3d 743, 750-751 (6th Cir. 1994),
revg. T.C. Memo. 1992-311, and Emershaw v. Commissioner, 949 F.2d
841 (6th Cir. 1991), affg. T.C. Memo. 1990-246. In each of these
cases, the court applied the “payor of last resort” test that it
first adopted in Emershaw. That test essentially asks in the
setting of section 465(b) whether the taxpayer has a fixed and
definite obligation to use personal funds to pay a debt in a
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