Posted by Lee Meyercord and Jessica Kirk
The IRS recently released final regulations under section 752 that ended the viability of bottom-dollar guarantees. The final regulations substantially adopt the temporary regulations issued on October 5, 2016. Bottom-dollar guarantees have long been a tax-planning technique to increase a partner’s basis in her partnership interest and defer gain recognition. The IRS has been critical of bottom-dollar guarantees because it believes they lack a substantial business purpose and economic significance.
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