Coverage of mortgage by insurance against the
risk of loss of income
A liability is recourse to the extent that a partner or a related person bears the economic
risk of loss for that liability under Regs.
In this case, the
risk of loss is not transferred from the seller to the buyer until the produce is delivered to the contract destination.
Although the second owner of the LLC, IO, does not bear direct
risk of loss, the IRS argued it should be allocated part of the loan since it is a related party to Forsythe, who does bear the
risk of loss.
Title transfer is a legal question and generally determines when
risk of loss and control passes from the seller to the buyer.
The original framework assessed capital mainly in relation to credit risk (the
risk of loss due to the failure of a counterparty to meet its obligations) and addressed other risks only implicity, effectively loading all regulatory capital requirements on measures of credit risk.
RAID-5 (striped parity): During a single disk failure, data is at
risk of loss because there is no redundancy.
The net effect of the legislation is to pass the
risk of loss after seven years to the building owner.
On the down side, the facility needs additional business office personnel, assumes the
risk of loss from bad debts and rejected claims, and may see cash flow restricted.
In either case, the IRS reasoned, the taxpayer would have the benefits and burdens of ownership, and the opportunity for gain and
risk of loss on a sale to a third party.
A partnership liability is recourse to the extent that one or more partners (or a related person) bear the economic
risk of loss for the liability.
For the sale to be valid, the controlling shareholder must have taken an equity interest in the property and assumed the
risk of loss.
