Which of the following statements regarding a partner's basis adjustments is True?
A) A partner's basis may never be reduced below zero.
B) A partner must adjust his basis for ordinary income (loss) but not for separately stated items.
C) A partnership fine or penalty paid by the partnership does not affect a partner's basis.
D) Relief of partnership debt increases a partner's tax basis.

Question

Quizplus · Accepted Answer

A partner's basis adjustments may never reduce his basis below zero. Any ordinary income (loss) and separately stated items either increase or decrease a partner's basis. A partnership's non-deductible expenses and relief of partnership debt will decrease a partner's basis.

Which of the Following Statements Regarding a Partner's Basis Adjustments