Partner S Outside Basis in Partnership

Partner’s Outside Basis in Partnership

Client:______________________________________________________ % of Ownership _________

Howe interest acquired: Purchase $______ Section 721 $______ Inheritance of Gift $ ______

Date ______ Date ______ Date ______

Step 1 – Additions to Basis

1. Initial or basis from prior year $______

Share of all liabilities from prior year $ ______

2. Partner’s contribution to capital (cash, property or services) _______

3. Current year’s ordinary income from K-1, line 1 and other income (2 & 3) ______

4. Separately stated items of income (see K-1) _______

a) Interest $ b) Dividends $

c) Royalties d) Net short-term Gain

e) Net long-term Gain f) Other Portfolio Income

g) Nest Section 1231 Gain h) Other Income

i) CODI income

5. Add: Lines 4 a) through 4 h) ______

6. Excess depletion deduction – depletion over cost basis _____ Remaining

7. Increase in share of all liabilities ______ Basis

8. Other increases or adjustment – Identify ______________ ______ Not Less

9. Add: Lines 1, 2, 3, 5, 6, 7 and 8 $______ than zero

Step 2 – Decrease in Basis – Liabilities and Distributions

10. Decrease in partner’s share of all liabilities (Subtract line 10 from line 9) $______ $______

11. Distribution (cash or property (lesser of parnership’s basis or remaining

Outside basis)]

Subtract line 1] from line 10(B). If line 11(B) is negative, report gain from

Distribution in excess of basis (treated as capital gain) $______ $______

Caution: A cash distribution is tax-free up to outside basis, but if over basis, the excess is treated as a capital gain. The only other time a current cash distribution is taxable is when Section 751(a) applies (disproportionate distribution with substantially appreciated inventory or unrealized receivables). A property distribution is not taxable unless it is a disproportionate distribution under Section 751(b) [not a pro rata distribution or 704(c) applies (original partner 7-year rule)[.

Step III – Income Tax-Reductions in Basis for Current Year

12. Current year’s loss from K-1, line 1 and other losses (lines 2 and 3) $______

13. Separately stated items of loss and deduction (see K-1)

a) Net Short-Term Loss _________ b) Net Long-Term Loss _________

c) Other Portfolio Losses _________ d) Section 1231 Loss _________

e) Section 179 Expensing _________ f) Charitable Contri. _________

g) Investment Interest _________

14. Add: Lines 13 a) through 13 g) ______

15. Deduction for percentage depletion – Oil and gas wells ______

16. Annual business credits to extent reduction in assets basis under 50(c) ______

17. Nondeductible partnership expenses that are not capital expenditures ______

a) 20% Disallowed T & E _________ b)Penalties & Fines _________

c) Tax-Exempt Income Exp. _______ d)Partner’s Life Ins _________

e) Club Dues ________

18. Add: Lines 17 a) through 17 e) ______

19. Other deductions or adjustments: Add amounts paid that would be itemized

Deductions on Form 1040 Payments for partners’ medical & dental, etc,

a) _______, IRA ______, Keogh or SEP b) ______, other c) ______ ______

20. Add: Lines 12, 14, 15, 18 and 19 ______

21. Adjusted basis at end of year (not less than zero): Subtract line 20 from line 11(B) $

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22. Partner’s share of all liabilities – Total liabilities $ ______x_____% = $ _______