accommodation party

Also found in: Dictionary, Thesaurus, Legal, Encyclopedia.

Related to accommodation party: accommodation endorser

accommodation party

One who signs a promissory note even though he or she receives no direct economic benefit from it.Typically, a financially strong party who must add his or her name to the transaction or the true borrower would not qualify for the loan. There is a widespread and mistaken belief among accommodation parties that they simply signed their name but will not be held responsible if the loan goes into default. This is incorrect; they will be held liable for the full amount of the loan if there is a default.(Do not confuse with accommodating party.)

References in periodicals archive ?

The accommodation party holding title to the replacement property must not be the taxpayer's agent.

Non-safe-harbor reverse-exchange guidance

Reverse-exchange structures have also raised issues as to the identity of the accommodation party. In a deferred exchange, the transaction is typically conducted through a QI; to avoid an agency relationship with the taxpayer, the QI cannot be a "disqualified person," according to Regs.

Rev. Proc. 2000-37 offers long-awaited reverse-exchange safe harbor

Parking transactions typically are designed to "park" the desired replacement property with an accommodation party until the taxpayer arranges for the transfer of the relinquished property to the ultimate transferee in a simultaneous or deferred exchange.

IRS issues guidance on use of accommodation parties in deferred like-kind exchanges