IRS Finalizes Rules on Partnership Liabilities

The IRS issued final regulations on partnership liabilities under Section 752, and finalized the withdrawal of temporary rules.

The final rules (T.D. 9877), released Oct. 4, provide guidance for partnerships allocating liabilities among partners.

An agency official had said in May that it was reviewing guidance on the allocation of partnership liabilities under Section 752 and disguised sales under Section 707. A disguised sale to a partnership is a taxable transaction, according to the code section.

The agency in 2016 issued temporary regulations that would have limited partners’ ability to boost their investment in a partnership ...