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 preparer, trying to calculate the outside basis of an partner.
You've been briefed with the following facts:
- There was a $385 partner share of non-deductible, not-capital expenses.
- The currently recorded basis is $1,936.
- There was a $183 receipt of the partner's share of tax-exempt income.
- There was a $220 receipt of the partner's share of partnership income.
What is the outside basis for the partner?
Answer:
- The outside basis is $1,954.00.
Explanation:
- We start with the initial basis for the partner's share of the partnership.
OUTSIDE BASIS = $1,936 - Then we'll add, or subtract, each adjustment, one at a time.
- The partner share of non-deductible, not-capital expenses will decrease the basis of the property.
OUTSIDE BASIS = $1,936 - $385 - The receipt of the partner's share of tax-exempt income will increase the basis of the property.
OUTSIDE BASIS = $1,936 - $385 + $183 - The receipt of the partner's share of partnership income will increase the basis of the property.
OUTSIDE BASIS = $1,936 - $385 + $183 + $220