If a partner contributes property to a partnership,and that property is subject to a liability,the noncontributing partners increase the basis of their partnership interests by their share of the partnership liabilities that were transferred to the partnership.

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According to the tax law, when a partner contributes property to a partnership that is subject to a liability, the noncontributing partners increase the basis of their partnership interests by their share of the partnership liabilities that were transferred to the partnership. This is known as the "liability allocation rule."

If a Partner Contributes Property to a Partnership,and That Property