A partner's debt relief from the sale of a partnership interest will decrease his outside basis.

Question

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A partner's debt relief from the sale of a partnership interest is treated as money received in the sale, which can increase the amount realized on the sale but does not directly decrease the partner's outside basis. The outside basis is adjusted for the partner's share of partnership liabilities, but the relief of debt itself is part of the calculation of gain or loss on the sale, not a direct reduction of outside basis.

A Partner's Debt Relief from the Sale of a Partnership