Determining your basis in an investment can be complex and should be done with the help of a tax professional. The basis of an interest in a partnership is increased or decreased by certain items.
· The partner's additional contributions to the partnership, including an increased share of, or assumption of, partnership liabilities.
· The partner's distributive share of taxable and nontaxable partnership income.
· The partner's distributive share of the excess of the deductions for depletion over the basis of the depletable property, unless the property is oil or gas wells whose basis has been allocated to partners.
Decreases. The partner's basis is decreased (but never below zero) by the following items.
· The money (including a decreased share of partnership liabilities or an assumption of the partner's individual liabilities by the partnership) and adjusted basis of property distributed to the partner by the partnership.
· The partner's distributive share of the partnership losses (including capital losses).
· The partner's distributive share of nondeductible partnership expenses that are not capital expenditures. This includes the partner's share of any section 179 expenses, even if the partner cannot deduct the entire amount on his or her individual income tax return.
· The partner's deduction for depletion for any partnership oil and gas wells, up to the proportionate share of the adjusted basis of the wells allocated to the partner.