[jcw1503]

I understand that you are suppose to add a partner’s portion of a liability to it’s basis, but why? Would a liability not take away a basis…

Quick example:

Partner R has 25% partnership

If a Company consumes a liability of $30 dollars than Partners R portion is $7.50. That $7.50 gets ADDED to Partner R’s basis. I just don’t understand this.

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[Whatdidyou]

So when the PS takes on liabilities, the partners now have even more “at risk” due to being on the hook for their share of the liabilities taken on by the partnership. This increases their basis (just like when the PS if formed with a cash contribution, the partner has the FMV of the cash they contributed at risk).

If PS liabilities decrease, then the individual partners will have less at risk and therefore their basis will decrease.

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[jcw1503]

So if they contribute $100 dollars they have $100 dollars on the line, thus they have a basis of $100. However, when a liability gets added, like the $7.50 above it gets added to their basis not because they have more money that they put into the partnership at risk but because they are on the hook for the portion of the liability if the partnerhsip can't pay it. Is this correct?

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AUD- Attempt 1-Passed!!!!!!!!! )-Praise the Lord-Couldn't have done it without him.
REG-Attempt 1-(73)...Attempt 2 (Passed Baby)-Praise the Lord-Couldn't have done it without him.
BEC-Attempt 1-(71)...Attempt 2 (Passed Baby)-Praise the Lord-Couldn't have done it without him.

****What is one Golden Rule for Passing the Exam? 1) Read the question properly. and 2) Leave yourself enough time to answer all of the....
****Success seems to be connected with action. Successful people keep moving. They makes mistakes, but they don't quit.
****Success is the sum of small efforts, repeated day in and day out.

[Hurshid]

Good question!

Ok, here's the tricky additional question – when PS assumes liabilities, does a partner's “basis” that rises, or “basis at-risk”.

Is there any difference?

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[Author]

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