What liability classification would a repair reserve held by a lender be? Partnership has a mezzanine loan had holds a repair reserve liability. Should that be Recourse or Non-Recourse on a K-1?
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1 Replies
MinhT1
Expert Alumni
Mar 10, 2021 7:29:55 AM
It depends on the terms in the loan contract.
If the lender is allowed to collect what is owed from the borrower after taking collateral, then it is a recourse loan.
Please read this IRS document for more information.