Tax and Cross-Collateralized Nonrecourse Liability

20 Pages Posted: 9 Sep 2020

See all articles by Douglas A. Kahn

Douglas A. Kahn

University of Michigan Law School

Jeffrey H. Kahn

Harry M. Walborsky Professor, Florida State University College of Law; Associate Dean, Business Program

Date Written: August 2020

Abstract

This article explores the tax treatment of cross-collateral nonrecourse debt. When using the term cross-collateral debt, we are referring to nonrecourse debt that is connected with more than one piece of property. While tax issues concerning cross-collateralized properties can arise in several circumstances, the focus of this article is on the tax treatment of a transfer of property subject to a cross-collateralized nonrecourse liability to a controlled corporation in exchange for stock that qualifies for some or all nonrecognition under § 351. The article also discusses two other tax issues involving cross-collateralized nonrecourse liability – namely, cancellation of debt and determination of basis issues.

Keywords: Taxation, Cross-Collateral, Nonrecourse, Debt, Liability, Basis

JEL Classification: H20, H25

Suggested Citation

Kahn, Douglas A. and Kahn, Jeffrey H., Tax and Cross-Collateralized Nonrecourse Liability (August 2020). 24 Florida Tax Review __ (2021), U of Michigan Public Law Research Paper Forthcoming, FSU College of Law, Public Law Research Paper No. 928, FSU College of Law, Law, Business & Economics Paper No. 20-15, Available at SSRN: https://ssrn.com/abstract=3666312

Douglas A. Kahn

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4043 (Phone)

Jeffrey H. Kahn (Contact Author)

Harry M. Walborsky Professor, Florida State University College of Law; Associate Dean, Business Program ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States
850.644.7474 (Phone)

HOME PAGE: http://www.law.fsu.edu/faculty/jkahn.html

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