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:
- There was a $283 receipt of the partner's share of partnership income.
- There was a $354 increase in the partner's share of partnership liabilities.
- There was a $226 partner share of partnership losses.
- The currently recorded basis is $1,541.
What is the outside basis for the partner?
Answer:
- The outside basis is $1,952.00.
Explanation:
- We start with the initial basis for the partner's share of the partnership.
OUTSIDE BASIS = $1,541 - Then we'll add, or subtract, each adjustment, one at a time.
- The increase in the partner's share of partnership liabilities will increase the basis of the property.
OUTSIDE BASIS = $1,541 + $354 - The partner share of partnership losses will decrease the basis of the property.
OUTSIDE BASIS = $1,541 + $354 - $226 - The receipt of the partner's share of partnership income will increase the basis of the property.
OUTSIDE BASIS = $1,541 + $354 - $226 + $283