§705 — Title 26 Internal Revenue Code | U.S. Code

Summary

Your tax basis in a partnership interest starts with what you paid in or how you got the interest, and then moves with the partnership's results. It goes up by your share of the partnership's taxable income, its tax-exempt income, and certain excess depletion deductions. It goes down — but never below zero — by distributions you receive, your share of partnership losses, your share of nondeductible expenses that are not capital costs, and your depletion deductions on partnership oil and gas property. The IRS can issue rules letting you instead figure your basis from your share of the partnership's basis in its property when the partnership ends.

Title 26, §705

Internal Revenue Code — Source: USLM XML via OLRC

(a)The adjusted basis of a partner’s interest in a partnership shall, except as provided in subsection (b), be the basis of such interest determined under section 722 (relating to contributions to a partnership) or section 742 (relating to transfers of partnership interests)—

(1)increased by the sum of his distributive share for the taxable year and prior taxable years of—

(A)taxable income of the partnership as determined under section 703(a),

(B)income of the partnership exempt from tax under this title, and

(C)the excess of the deductions for depletion over the basis of the property subject to depletion;

(2)decreased (but not below zero) by distributions by the partnership as provided in section 733 and by the sum of his distributive share for the taxable year and prior taxable years of—

(A)losses of the partnership, and

(B)expenditures of the partnership not deductible in computing its taxable income and not properly chargeable to capital account; and

(3)decreased (but not below zero) by the amount of the partner’s deduction for depletion for any partnership oil and gas property to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such partner under section 613A(c)(7)(D).

(b)The Secretary shall prescribe by regulations the circumstances under which the adjusted basis of a partner’s interest in a partnership may be determined by reference to his proportionate share of the adjusted basis of partnership property upon a termination of the partnership.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1984—Subsec. (a)(3). Pub. L. 98–369 substituted “for any partnership oil and gas property to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such partner under section 613A(c)(7)(D)” for “under section 611 with respect to oil and gas wells”. 1976—Subsec. (a)(3). Pub. L. 94–455, § 2115(c)(3), added par. (3). Subsec. (b). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

Statutory Notes and Related Subsidiaries

Effective Date

of 1984 Amendment Pub. L. 98–369, div. A, title VII, § 722(e)(3)(A),

July 18, 1984, 98 Stat. 974, provided that: “The amendment made by paragraph (1) [amending this section] shall take effect on

January 1, 1975.”

Effective Date

of 1976 AmendmentAmendment by section 2115(c)(3) of Pub. L. 94–455 effective on Jan. 1, 1975, and applicable to taxable years ending after Dec. 31, 1974, see section 2115(f) of Pub. L. 94–455, set out as a note under section 613A of this title.

§705 Determination of Basis of Partner’s Interest

Summary

Title 26, §705

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata