Reiterating the holding in Hambrose Leasing v. Commissioner, 99 T.C. 298, 310 (1992), the IRS published PLR 201424022 stating that the IRC Sec. 465 “at-risk” provisions do not apply at the partnership level. Instead, only after the tax implications are passed through to the individual will the court be able to make a determination of the amount an affected item is “at-risk.” In Hambrose Leasing, the court found “that the determination of amounts at risk with respect to partnership liabilities personally assumed by individual partners is not a partnership item, but is an affected item, which can be dealt with only in a proceeding involving the partners and not in this partnership level proceeding.” Hambrose Leasing v. Commissioner, 99 T.C. 298, 310 (1992).
Posted by Christopher Lee, Associate Editor, Wealth Strategies Journal.