accommodation party


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Related to accommodation party: accommodation endorser

accommodation party

One who signs a promissory note even though he or she receives no direct economic benefit from it.Typically, a financially strong party who must add his or her name to the transaction or the true borrower would not qualify for the loan. There is a widespread and mistaken belief among accommodation parties that they simply signed their name but will not be held responsible if the loan goes into default. This is incorrect; they will be held liable for the full amount of the loan if there is a default.(Do not confuse with accommodating party.)

References in periodicals archive ?
The accommodation party holding title to the replacement property must not be the taxpayer's agent.
2000-37 safe harbor, most tax advisers have counseled taxpayers to use an accommodation party who meets the QI definition to avoid unnecessarily exacerbating the agency issue.
Accordingly, this revenue procedure provides a safe harbor that allows the taxpayer to treat the accommodation party as the owner of the property for Federal income tax purposes, thereby enabling the taxpayer to accomplish a qualifying like-kind exchange.