9 what would your answer to number 8 be if the

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9. What would your answer to Number 8 be if the nonrecourse debt had priority over the recourse debt?
10. LP is a limited partner and GP is a general partner of the LG partnership. LP contributes $90,000 and GP contributes $10,000 to the partnership, which then gets a $400,000 nonrecourse loan and purchases a building for $500,000. GP is required to make up any capital account deficit, but LP is not. However, the partnership agreement has a qualified income offset provision for LP and also a minimum gain chargeback provision. The partnership allocates 90% of all partnership items to LP and 10% to GP, until the partnership generates minimum gain. At that point they will be allocated 50/50. Is this allocation “reasonably consistent” with the allocation of items that do have substantial economic effect? What would your answer be if, after the partnership generates minimum gain, items of income and loss are allocated 99% to LP and 1% to GP?

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