J and K decided they wanted to get in the rental real estate business.This year J and K formed a partnership.The partnership bought a 200 unit complex called Lazy Acres from the Trumpet Group for $1,000,000.The partnership gave Trumpet $200,000 cash and a note for $800,000 which was secured by the apartment complex.For purposes of the at-risk rules, the note to Trumpet is considered qualified nonrecourse financing.

Question

Quizplus · Accepted Answer

The note to Trumpet would not be considered qualified nonrecourse financing for at-risk purposes because it is secured by real property and not by the partnership's own assets or activities.

J and K Decided They Wanted to Get in the Rental