Internal Revenue Code:Sec. 705. Determination of basis of partner's interest

From TaxAlmanac

Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle A - Income Taxes
       CHAPTER 1 - NORMAL TAXES AND SURTAXES
        Subchapter K - Partners and Partnerships
         PART I - DETERMINATION OF TAX LIABILITY
       

Statute

    Sec. 705. Determination of basis of partner's interest
 
    (a) General rule
      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) Alternative rule
      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.
 

Sources

    (Aug. 16, 1954, ch. 736, 68A Stat. 242; Pub. L. 94-455, title XIX,
    Sec. 1906(b)(13)(A), title XXI, Sec. 2115(c)(3), Oct. 4, 1976, 90
    Stat. 1834, 1909; Pub. L. 98-369, div.  A, title VII, Sec.
    722(e)(1), July 18, 1984, 98 Stat. 974.)
 

Miscellaneous

                                 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, Sec. 2115(c)(3), added
    par. (3).
      Subsec. (b). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ''or
    his delegate'' after ''Secretary''.
                      EFFECTIVE DATE OF 1984 AMENDMENT
      Section 722(e)(3)(A) of Pub. L. 98-369 provided that: ''The
    amendment made by paragraph (1) (amending this section) shall take
    effect on January 1, 1975.''
                      EFFECTIVE DATE OF 1976 AMENDMENT
      Amendment 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.
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in section 776 of this title.