Final regulations issued regarding allocation of appreciation recapture among partners

Article Abstract:

The IRS issued final regulations under IRC section 1245 which provide guidance on the treatment of depreciated partnership property recapture when transferring partnership interests. The regulations include methods of allocation including the traditional method, the curative method, and the remedial method. Planning in advance with reference to sections 704(c) and 754 is advisable.

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Proposed regulations focus upon allocation of partnership depreciation recapture

Article Abstract:

Proposed IRC sec. 1245 regulations would change the way in the recapture of partnership depreciation is allocated. Under existing law, some partnership gains are considered to be ordinary income, but the proposed changes would allow recapture to be allocated in more logical manner. Allocation problems and special rules for contributed property are also discussed.

Partnerships, Capital Management-Depreciation, Depreciation

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Revisiting minimum-gain chargebacks

Article Abstract:

Final regulations under IRC section 704(b) eliminate the dual standard for allocation of gain that allowed partners to avoid immediate recognition of minimum-gain chargeback income associated with nonrecourse liabilities. The new rules, issued on Dec 27, 1991, use the partners' respective shares in the minimum gain as the chargeback basis.

Nonrecourse debt

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