[jcw1503]

I was wondering where the capital gain from the excess of liability relieved over basis of property is recorded? I know it used in the partnership basis calculation, but does the partner have to record that capital gain on their tax return as income too? Thanks.

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[jokami]

Yes the “donor” in the partnership has to report HIS SHARE, if any, as a capital gain. The trick with partnership is that even though you donated… Let's say: land, a building, any property that has a loan greater than its value, you have to be aware that only a percentage remains your personal risk. So the other partners ADD their share of risk to their basis, you SUBTRACT thier share to your basis, and if that percentage amount eliminated from your basis is still greater than your “donation”; then you have a capital gain and have taxable income in your tax report.

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