What does qualified nonrecourse financing mean on the CPA exam?
Qualified nonrecourse financing. Borrowing secured by real property from a commercial lender, where nobody is personally liable. It counts toward a partner's at-risk amount even though the debt is nonrecourse.
Defined against Sec. 465(b)(6).
Which CPA exam sections use qualified nonrecourse financing?
Qualified nonrecourse financing appears in the REG section of the CPA exam.
Related terms
- at-risk amount: How much a taxpayer could actually lose in an activity: cash and property contributed, plus debt they are personally liable for.
- real property: Land and anything permanently attached to it, such as a building.
- limited partnership: A partnership with at least one general partner who manages and is personally liable, and limited partners who invest without personal liability or control.
- outside basis: A partner's tax basis in the partnership interest itself.
- capital asset: For tax, almost everything a taxpayer owns EXCEPT inventory, receivables, and depreciable or real property used in a trade or business.
- like-kind exchange: A swap of real property held for business or investment, where gain is deferred rather than recognized.