R3-M6

Question 1

Recourse Debt

Answer 1

1. Accounts Payable is recourse debt
2. Partnership recourse debt is allocated to general partners because they have personal liability for the debts of the partnership and bear the economic risk of loss.
3. Limited partner has limited liability and therefore not liable for the recourse debt

Question 2

Retirement Plan Contributions

Answer 2

1. Only retirement plan contributions for employees are included in ordinary business income on Page 1 of Form 1065
2. Retirement plan contributions for partners are included on Schedule K of the partnership income tax