[Anonymous]

Hi all,

First of all let me say that I have spent way too much time on this topic. While reviewing the Becker material on partnerships, I noticed that it said that when calculating a partnerships basis in contributed property the general rule is NBV or debt assumed (if greater).

This sounded fine until I was reviewing NINJA notes and I noticed that the example in Ninja Notes only included the adjusted basis, so I went to my tax book and it said the same thing—only the adjusted basis carries over.

So I simply assumed it was a mistake on Becker’s part, but to double check I went to the IRS website and it confirms what Becker says: Partnership’s basis= Adj Basis + transferor’s gain.

So then I went through Becker’s multiple choice on partnerships and the multiple choice on partnerships from cpareviewforfree and could not find an example that calculated a partnerships basis. (admittedly I just scanned the Becker questions). Frustrating….

Does anyone know what the correct way to account for a partnership’s basis is? Any input is appreciated.

[Anonymous]

Edit: I guess this could be the result of a new law because I looked at the updated version of NINJA Notes and it confirms with what Becker says, so I guess my tax book and the expired set of NINJA Notes are probably out of date.

[LongShot]

I believe the adjusted basis+transferor's gain is correct, but generally the gain will be $0 so it's essentially just adjusted basis. Would recognize a gain when liability exceeds basis.

Without notes in front of me, I believe example used was property with a basis of $4k, liability of $6k, and getting 20% ownership. Because liability assumed by partnership exceeds basis, a gain will be recognized by $4,800 (80% of $6k liability) and subtracting $4k basis to get an $800 gain.

Usually the liability does not exceed the gain so the the formula is: $x adjusted basis+$0 gain, or just the adjusted basis.

FAR - 75
AUD - 72; 87
REG - 64; 74; 84
BEC - 88

Done!!

[Anonymous]

Thanks… it must be a new law since the old Ninja Notes did not include the transferor's gain, but the updated version does. I hope you pass REG!

[Author]

Replies