What is the correct order for applying the following three items to adjust a partner's tax basis in his partnership interest: (1) Increase for share of ordinary business income, (2) Decrease for share of separately stated loss items, and (3) Decrease for distributions?
A) 1, 3, 2.
B) 3, 1, 2.
C) 2, 3, 1.
D) 1, 2, 3.

Question

Quizplus · Accepted Answer

The correct order is to first increase the basis for the share of ordinary business income, then decrease for distributions, and finally decrease for separately stated loss items.

What Is the Correct Order for Applying the Following Three