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Basis

Partner's Basis Worksheet calculation of basis limitation

A partner's distributive share of partnership loss is allowed only to the extent of the adjusted basis, before reduction by current-year's losses, of such partner's interest in the partnership at the end of the partnership taxable year in which such loss happened. UltraTax CS calculates this adjusted basis all the way through to expenditures of the partnership not deductible in calculating its taxable income and not properly chargeable to the capital account. Partnership losses and deductions are allowed in full when the total is less than the adjusted basis. When the total of loss and deductions exceeds the outside basis as adjusted previously, a portion of each loss item is allowed, based on the proportion that each bears to the total of all loss items. Losses and deductions not allowed this year because of the basis limit are carried forward indefinitely and deducted in a later year subject to the basis limit for that year.
UltraTax CS combines all K1 units from the same partnership to give a single, aggregated adjusted basis for all interest in the partnership per IRS Revenue Ruling 84-53.

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