Outside Basis for a Partnership
Lesson:
The outside basis of a partnership is the partner's basis in their portion of the partnership.
You're a tax accountant, trying to calculate the outside basis of a partner.
The only relevant information you've discovered is as follows:
- The currently recorded basis is $1,180.
- There was a $199 partner share of partnership losses.
- There was a $58 distribution of property from the partnership to the partner.
- There was a $216 increase in the partner's share of partnership liabilities.
What is the outside basis for the partner?
Answer:
- The outside basis is $1,139.00.
Explanation:
- We start with the initial basis for the partner's share of the partnership.
OUTSIDE BASIS = $1,180 - Then we'll add, or subtract, each adjustment, one at a time.
- The partner share of partnership losses will decrease the basis of the property.
OUTSIDE BASIS = $1,180 - $199 - The increase in the partner's share of partnership liabilities will increase the basis of the property.
OUTSIDE BASIS = $1,180 - $199 + $216 - The distribution of property from the partnership to the partner will decrease the basis of the property.
OUTSIDE BASIS = $1,180 - $199 + $216 - $58