The IRS currently offers the following five programs for noncompliant taxpayers: (i) the Offshore Voluntary Disclosure Program (OVDP), (ii) Streamlined Domestic Offshore Procedures, (iii) Streamlined Foreign Offshore...more
In the case of Wells Fargo Bank N.A. v. RLJ Lodging Trust, an Illinois district court denied a lender’s motion for summary judgment seeking to enforce a bad boy carve-out provision in a guaranty agreement providing for full...more
On April 15, 2016, the IRS released a generic legal advice memorandum (GLAM 2016-001) (the “April GLAM”) addressing the impact of so-called “bad boy” guarantees (also known as nonrecourse carve-out guarantees) on the...more
IRS Publishes Proposed section 305(c) Regulations - On April 12th, the IRS published proposed regulations under Section 305(c) that address the treatment of deemed dividends to holders of stock and rights to acquire...more
IRS Reevaluates "Bad Boy" Carve-Outs - Before providing a non-recourse loan to a Limited Liability Company (LLC) – i.e., one for which the LLC members do not bear the risk of economic loss – a lender often will require...more
The IRS Office of Chief Counsel recently released a memorandum (#AM2016-001) addressing the proper tax treatment of nonrecourse carve-outs (or bad boy guarantees) in the partnership context. According to the memorandum, such...more
On April 15, 2016 the IRS reversed its controversial position that bad boy guarantees may convert nonrecourse debt into recourse debt. General Legal Advice Memorandum Number AM2016-001 released April 15, 2016 effectively...more
Earlier this year, the IRS issued Chief Counsel Advice 201606027 (February 5, 2016) concluding that, for purposes of the basis and at-risk limitations, an LLC member’s guarantee of entity-level nonrecourse debt conditioned...more
In a client advisory dated February 25, 2016, we described a legal memorandum released by the Office of Chief Counsel of the Internal Revenue Service (the “Memorandum”) which took the position that a typical “carve-out” or...more
As previously discussed, the IRS recently released a chief counsel advice memorandum that concluded that bad boy guarantees turned what would otherwise be a nonrecourse debt into a recourse debt for Section 752 purposes....more
On February 5, 2016, the Internal Revenue Service (IRS) released Chief Counsel Advice 201606027 (the 2016 CCA) in which the IRS concluded, among other things, that guarantees by a partner of a partnership’s liabilities that...more
I. OVERVIEW - A recently released legal memorandum by the Internal Revenue Service (IRS) Office of Chief Counsel, CCA 201606027 (the “Memorandum”), concluded that a so-called “bad boy guarantee” provided by a sponsor of...more
The IRS Office of Chief Counsel recently released legal memorandum 201606027 (the “IRS Memorandum” or “Memorandum”) that calls into question two fundamental and well-established aspects concerning the tax treatment of...more
Under the Section 752 regulations, partnership liabilities (including liabilities of LLCs that are taxed as partnerships) are allocated among the partners based on who bears the economic risk of loss. If no partner is...more
The IRS recently released IRS legal memorandum 201606027. In this memorandum, the IRS considered the impact of a bad boy guarantee on allocating partnership liabilities under Section 752. Traditionally, bad boy guarantees...more
A new type of threat is emerging that may thwart special servicer collections: retroactive state legislation. For most CMBS collection actions involving nonrecourse loans, the issue of springing recourse triggers (so-called...more
A recent decision in the protracted litigation by lenders of Extended Stay to recover under guaranties executed by owners of Extended Stay highlights the need for clear and unambiguous drafting in intercreditor agreements....more
In addition to the events that create “full recourse” liability (for the entire loan), bad boy liability also includes losses or damages incurred by the Lender based upon another list of “bad” events or triggers. I’m sure...more
Several months ago, I mused that, due to the conservative trending of commercial real estate lending, the list of “bad boy” exceptions (to a “no personal liability” deal) could be viewed as a full recourse deal. In other...more