Basis of Partner's Interest

Free CPA TCP (Tax Compliance & Planning) lesson in Entity Tax Compliance. 19 min read, ~2,805 words.

Initial outside basis equals cash contributed plus adjusted basis of property contributed (not FMV), reduced by liabilities assumed by the partnership and increased by the partner's share of partnership liabilities. Contributions of encumbered property create a two-step adjustment: decrease for the full liability transferred, increase only for the partner's allocable...