81 FR 80993 - Liabilities Recognized as Recourse Partnership Liabilities Under Section 752; Correction

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 81, Issue 222 (November 17, 2016)

This document contains corrections to final and temporary regulations (TD 9788) that were published in the Federal Register on Wednesday, October 5, 2016 (81 FR 69282). The final and temporary regulations provide rules concerning how liabilities are allocated for purposes of section 707 of the Internal Revenue Code and when certain obligations are recognized for purposes of determining whether a liability is a recourse partnership liability under section 752.

[Federal Register Volume 81, Number 222 (Thursday, November 17, 2016)]
[Rules and Regulations]
[Pages 80993-80994]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-27517]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9788]
RIN 1545-BM84


Liabilities Recognized as Recourse Partnership Liabilities Under 
Section 752; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

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SUMMARY: This document contains corrections to final and temporary 
regulations (TD 9788) that were published in the Federal Register on 
Wednesday, October 5, 2016 (81 FR 69282). The final and temporary 
regulations provide rules concerning how liabilities are allocated for 
purposes of section 707 of the Internal Revenue Code and when certain 
obligations are recognized for purposes of determining whether a 
liability is a recourse partnership liability under section 752.

DATES: This correction is effective November 17, 2016 and is applicable 
on and after January 3, 2017.

FOR FURTHER INFORMATION CONTACT: Caroline E. Hay or Deane M. Burke 
(202) 317-5279 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The final and temporary regulations (TD 9788) that are the subject 
of this correction are under sections 707 and 752 of the Internal 
Revenue Code.

Need for Correction

    As published, the final and temporary regulations (TD 9788) contain 
errors that may prove to be misleading and are in need of 
clarification.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Correction of Publication

    Accordingly, 26 CFR part 1 is corrected by making the following 
correcting amendments:

[[Page 80994]]

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 1.707-5T also issued under 26 U.S.C. 707(a)(2)(B).


0
Par. 2. Section 1.707-5T is amended by revising paragraph (a)(2)(i); 
and paragraph (f) Example 7 (i) is amended by revising the second to 
last sentence. The revisions read as follows:


Sec.  1.707-5T  Disguised sales of property to partnership; special 
rules relating to liabilities (temporary).

    (a) * * *
    (2) * * *
    (i) In general. For purposes of Sec.  1.707-5, a partner's share of 
a liability of a partnership, as defined in Sec.  1.752-1(a) (whether a 
recourse liability or a nonrecourse liability) is determined by 
applying the same percentage used to determine the partner's share of 
the excess nonrecourse liability under Sec.  1.752-3(a)(3) (as limited 
in its application to this paragraph (a)(2)), but such share shall not 
exceed the partner's share of the partnership liability under section 
752 and applicable regulations (as limited in the application of Sec.  
1.752-3(a)(3) to this paragraph (a)(2)).
* * * * *
    (f) * * *

    Example 7. * * *
    (i) * * * For disguised sale purposes, assume that G's and H's 
share of liability 1 is $2,000 each in accordance with paragraph 
(a)(2) of this section (which determines a partner's share of a 
liability using the percentage under Sec.  1.752-3(a)(3), but not 
exceeding the partner's share of the liability under section 752 and 
applicable regulations). * * *
* * * * *


Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel, (Procedure and Administration).
[FR Doc. 2016-27517 Filed 11-16-16; 8:45 am]
BILLING CODE 4830-01-P