I often read comments and discussions on various SEO and marketing forums when people talk about lost Toolbar PR of their websites.
Well, i guess there are many possible reasons behind PR Penalty. Here are few of them. (Possible)
[1] Paid link activity: If you’re involved in any paid link activity and if unfortunately search engines smell it, then be ready to lose your PR. Google is damn against paid links activity. They want that if you really want to buy paid links, then buy them for traffic, not for SEO.
My advice: Add no-follow tags to avoid PR Penalty and other penalties too.
[2] Ratio of Outbound to Inbound links: If your websites have too many outbound links to other websites and lesser number of inbound links, I think it can affect your toolbar PR. Not necessarily but sometimes search engines may “feel” that your site is involved in some linking activity.
My advice: If there are too many outbound links as compared to inbound links, it makes sense to add no-follow tags or any redirects.
[3] Too many links per page: Don’t make your website look like “link farm”. If you’re linking hundreds of websites from single website then you can expect PR Drop. I remember, one of my authority domain (which is a kind of list of websites) was PR 5 and after sometime I lost PR for that domain. I thought of all possible reasons for it and then I considered this one responsible for PR drop. I immediately added no-follow to all sites in list and as expected, I got PR 5 Back!
My advice: If you’re linking more than 100 websites from single webpage, dont forget to add no-follow.
[4] Irrelevant Inbound Links: “Credit score repair” website has nothing to do with “weight loss” if ratio of irrelevant links is too much as compared to relevant links. There is high possibility that you can lose your PR. Always hunt for relevant links ONLY.
My advice: Don’t hunt for links, which won’t help anyway but give you a penalty.
[5] Too many links from same theme: If you’re getting all links from same theme, like all links from blog roll, or all links from directory, Google can easily figure it out that you’re involved purely in link building. They dont want that.
My advice: Vary your links’ nature, few from directories, few from blogs, few from articles. This variation would work better, rather great.
[6] Too many low quality links: If too many low quality links are pointed to your website, chances are there that you may get PR Penalty and even other penalties. What are quality links? In one sentence - link that comes from good and relevant content, not from bad neighbourhood and from original content
[7] Linking too fast: Especially, when you’re a new webmaster. Though too quick link growth (too get search engine rankings quickly 
) is risky.
My advice: Prepare your link building plan, work according to schedule and build links slowly.
[8] Linking from bad neighborhood: If your website is getting many links from adult or gambling or any spammy websites, it can be the reason for your PR Drop.
My advice: You’ll need to open eyes from where you get links. If you’ve found any such unwanted backlinks, try to remove it.
[9] Getting too many links from duplicate content: Many people write one article and submit it to 100s of crappy article website to get backlinks. I think it can affect your toolbar PR too.
My advice: Always concentrate on quality links rather than Quantity of links
[10] Linking single URL too many times: if you’re linking one URL, for example www.xyz-website.com too many time (such that it clearly look spammy) chances are that you may lose PR And also get other penalties.
My last advice: Don’t annoy search engines. Better play safe.
[11] Too many reciprocal links: Building too many reciprocal links can be the reason of losing PR. Reciprocal links is good way to build links sometime but excessive reciprocal links are hazardous.
My advice: Limit ratio of building reciprocal links lower.
[12] Involve in any spammy activity: Matt Cutts recently told in an interview that Google knows a lot about web spam, if you’ve been involved in any spammy activity in past and Google noticed it, you may face any penalties.
My advice: Stay away from any spammy activities.
