David Zimmerman was quoted in response to the question of whether recourse debt of a disregarded entity is treated as nonrecourse debt of the owner, as recourse debt of the owner, or something else entirely. Zimmerman said that though recently issued final regulations (Treas. Reg. 108-9; T.D. 9771) "punted on the issue of whether or not debt is recourse or nonrecourse for [section] 1001 and [section] 61 purposes, they did indicate though that at least you can take into account the debt of the disregarded entity in determining insolvency, and they said that as long as the tax owner hadn't done anything to make themselves liable for the debt, that they thought at least for determining insolvency purposes, it would be nonrecourse debt." As converting an entity into one that's disregarded is not a complicated process, "it raises the question that if the tax status of an entity changes, is that a reason or a time when you'd want to have a taxing event?" Zimmerman said.