Question

Under general circumstances, debt is allocated from the partnership to each partner in the following manner:

1. Recourse - profit sharing ratios; nonrecourse - to partners with the ultimate responsibility for paying the debt
2. Recourse - capital ratios; nonrecourse - capital ratios
3. Recourse - profit sharing ratios; nonrecourse - profit sharing ratios
4. Recourse - to partners with the ultimate responsibility for paying the debt; nonrecourse - profit sharing ratios

Answer 1

Debt is allocated from the partnership to each partner in the following manner:

Recourse - to partners with the ultimate responsibility for paying the debt; nonrecourse - profit sharing ratios

Option D is correct