K-1 Recourse or Non-Recourse

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?

posted

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.

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K-1 Recourse or Non-Recourse