IRS Offers Guidance on Partner's Share of Liabilities in Insolvency

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Partnerships seeking to know how partners should measure their insolvency in cases involving cancellation of indebtedness income get long-awaited answers in Revenue Ruling 2012-14. The revenue ruling describes how discharged partnership excess non-recourse debt is taken into account in measuring the insolvency of the partners under tax code Section 108(d)(3). Practitioners have been eagerly seeking the guidance in difficult economic times.