IRS Guidance on Insolvent Partner's Share in Partnership Liabilities Coming

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IRS will issue guidance during the current year concerning how to determine a potentially insolvent partner's share in partnership liabilities, an IRS official says. Beverly Katz, special counsel to the associate chief counsel (Passthroughs & Special Industries), says the guidance will concern how much of the partnership's excess liability a partner may take into account when the partner is trying to assess his own insolvency. “There's a revenue ruling, 92-53, which deals outside the partnership context, and says how much of your excess liabilities you may take into account,” Katz says. “The issue on the business plan concerns the situation of a potentially insolvent taxpayer whose assets include an interest in a partnership, where the partnership has excess liabilities.”

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