This column continues the discussion of tax issues resulting when a loan secured by real property (Troubled Loan) defaults or is restructured with a review of actions an individual limited partner or limited liability company (LLC) member can take apart from the actions at the limited partnership or LLC level.
Partner or LLC member level actions afford more flexibility for individual investors to time and choose the technique that is the most appropriate for their particular set of circumstances. Consequently, actions at the partner or member level allow individuals to adopt a technique that will minimize the adverse tax consequences that are normally associated with bailing out of a Troubled Loan property. Various techniques available to the individual partners include:
