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 in a partnership can never be reduced below zero. This is because a partner cannot have a negative basis in the partnership.

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