Recourse vs. Nonrecourse Liabilities in Partnerships and LLCs

Recourse and nonrecourse liabilities play a critical role in how partnerships and LLCs allocate debt, determine basis, and claim deductions. Understanding the distinction is essential for accurate tax reporting and avoiding costly errors under federal partnership tax rules. In this presentation, I explain the core differences between recourse and nonrecourse liabilities, how they affect each partner’s basis, and why misclassification can lead to IRS challenges. You’ll learn how economic risk of loss is assigned, how limited liability status impacts debt allocation, and what Treasury Regulations §1.752 requires for compliance. Whether you are a business owner, CPA, or tax attorney, mastering this concept will help ensure your entity remains compliant and your partners maximize available deductions without triggering audit exposure. Learn more: https://www.cummings.law/how-to-manage-recourse-vs-non-recourse-liabilities-in-partnerships/