Section 16.8 Recourse Versus Nonrecourse Liabilities

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

2. (§16.8) Recourse Versus Nonrecourse Liabilities

The second discharge-of-indebtedness rule that applies to all debtors is the difference in tax treatment accorded recourse versus nonrecourse indebtedness upon its discharge. Although generally the discharge-of-indebtedness rules apply equally regardless of whether the discharge debt is recourse or nonrecourse, special rules apply when debtors transfer encumbered property to creditors in satisfaction of the liabilities encumbering the property. In these...