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Abstract

This paper explores the methodology by which the Service has implemented the Congressional directive to allocate basis under I.R.C. §752 in accordance with economic realities. I.R.C. §752 contains rules for adjustment to a partner's basis in her partnership interest to reflect her share of the partnership's liabilities. The temporary regulations contain an elaborate set of rules for determining whether any partner bears the economic risk of loss with respect to a partnership liability, and for allocation of partnership liabilities among the partners in a manner consistent with the economic risk of loss analysis.

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