Under general circumstances, debt is allocated from the partnership to each partner in the following manner:
A) Recourse - capital ratios; nonrecourse - capital ratios.
B) Recourse - profit sharing ratios; nonrecourse - profit sharing ratios.
C) Recourse - to partners with the ultimate responsibility for paying the debt; nonrecourse - profit sharing ratios.
D) Recourse - profit sharing ratios; nonrecourse - to partners with the ultimate responsibility for paying the debt.

Question

Quizplus · Accepted Answer

Recourse debt is allocated to partners with the ultimate responsibility for paying the debt, regardless of their capital or profit sharing ratios. Nonrecourse debt is allocated based on profit sharing ratios.

Under General Circumstances, Debt Is Allocated from the Partnership to Each