Which of the following items decreases a partner's basis in his or her partnership interest?

Question

Quizplus · Accepted Answer

A cash distribution from the partnership reduces the partner's invested capital and, therefore, reduces their basis. A nondeductible expense that flows through from the partnership also reduces the partner's basis because the partner is essentially absorbing a portion of the expense. Finally, if a partner is released from partnership liabilities, the amount of the liabilities that are assumed by other partners increases those partners' bases, but decreases the basis of the partner that was released from those liabilities. Therefore, all of these items decrease a partner's basis in his or her partnership interest.

Which of the Following Items Decreases a Partner's Basis in His