§ 705. Determination of basis of partner’s interest

Statutory text

General rule

The adjusted basis of a partner’s interest in a partnership shall, except as provided in subsection (b), be the basis of such interest determined under section 722 (relating to contributions to a partnership) or section 742 (relating to transfers of partnership interests)—

increased by the sum of his distributive share for the taxable year and prior taxable years of—

taxable income of the partnership as determined under section 703(a),

income of the partnership exempt from tax under this title, and

the excess of the deductions for depletion over the basis of the property subject to depletion;

decreased (but not below zero) by distributions by the partnership as provided in section 733 and by the sum of his distributive share for the taxable year and prior taxable years of—

losses of the partnership, and

expenditures of the partnership not deductible in computing its taxable income and not properly chargeable to capital account; and

decreased (but not below zero) by the amount of the partner’s deduction for depletion for any partnership oil and gas property to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such partner under section 613A(c)(7)(D).

Alternative rule

The Secretary shall prescribe by regulations the circumstances under which the adjusted basis of a partner’s interest in a partnership may be determined by reference to his proportionate share of the adjusted basis of partnership property upon a termination of the partnership.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1954
Aug. 16, 1954, ch. 736, 68A Stat. 242 · 68A Stat. 242
Enacted · 26 U.S.C. § 705
Aug. 16, 1954, ch. 736, 68A Stat. 242
Source evidence
Code source credit
Aug. 16, 1954, ch. 736, 68A Stat. 242
1976
Pub. L. 94–455 § 2115(c)(3) · 90 Stat. 1520
Added · 26 U.S.C. § 705(a)(3)
Pub. L. 94–455, § 2115(c)(3), added par. (3)
Source evidence
Code amendment note
Subsec. (a)(3). Pub. L. 94–455, § 2115(c)(3), added par. (3).
Enacted provision · exact public law section
(3) Subsection (a) of section 705 (relating to the determination 26 USC 705. of basis of a partner’s interest in a partnership) is amended— (A) by striking out “and” in paragraph (1)(C), (B) by striking out the period at the end of paragraph (2) and inserting in lieu thereof “; and”, and (C) by adding at the end thereof the following: “(3) decreased (but not below zero), by the amount of the partner’s deduction for depletion under section 611 with respect to oil and gas wells.”
1976
Pub. L. 94–455 § 1906(b)(13)(A) · 90 Stat. 1520
Struck · 26 U.S.C. § 705(b)
Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”
Source evidence
Code amendment note
Subsec. (b). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Enacted provision · exact public law section
(A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.
1984
Tax Reform Act of 1984
Pub. L. 98–369 div. A title VII § 722(e)(1) · 98 Stat. 494
Substituted · 26 U.S.C. § 705(a)(3)
Pub. L. 98–369 substituted “for any partnership oil and gas property to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such partner under section 613A(c)(7)(D)” for “under section 611 with respect to oil and gas wells”
Source evidence
Code amendment note
Subsec. (a)(3). Pub. L. 98–369 substituted “for any partnership oil and gas property to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such partner under section 613A(c)(7)(D)” for “under section 611 with respect to oil and gas wells”.
Enacted provision · exact public law section
(1) Partnership interests.— Paragraph (3) of section 705(a) (relating to determination of basis of partner’s interest) is amended to read as follows: “(3) decreased (but not below zero) by the amount of the partner’s deduction for depletion for any partnership oil and gas property to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such partner under section 613A(c)(7)(D).”
Effective date note
Pub. L. 98–369, div. A, title VII, § 722(e)(3)(A), July 18, 1984, 98 Stat. 974, provided that: “The amendment made by paragraph (1) [amending this section] shall take effect on January 1, 1975.”

3 of 4 references resolved to an enrolled provision · 1 partial

Editorial Notes

Amendments1976–1984 · 2 rounds

1984

Subsec. (a)(3). Pub. L. 98–369 substituted “for any partnership oil and gas property to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such partner under section 613A(c)(7)(D)” for “under section 611 with respect to oil and gas wells”.

1976

Subsec. (a)(3). Pub. L. 94–455, § 2115(c)(3), added par. (3).

Subsec. (b). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

Statutory Notes and Related Subsidiaries

Effective Date of 1984 Amendment

Pub. L. 98–369, div. A, title VII, § 722(e)(3)(A), July 18, 1984, 98 Stat. 974, provided that: “The amendment made by paragraph (1) [amending this section] shall take effect on January 1, 1975.”

Effective Date of 1976 Amendment

Amendment by section 2115(c)(3) of Pub. L. 94–455 effective on Jan. 1, 1975, and applicable to taxable years ending after Dec. 31, 1974, see section 2115(f) of Pub. L. 94–455, set out as a note under section 613A of this title.

Credits

1954–1984 · 3 acts

1954Aug. 16, 1954, ch. 736, 68A Stat. 242
1976Pub. L. 94–455, title XIX, § 1906(b)(13)(A), title XXI, § 2115(c)(3), Oct. 4, 1976, 90 Stat. 1834, 1909
1984Pub. L. 98–369, div. A, title VII, § 722(e)(1), July 18, 1984, 98 Stat. 974.

Show as published

(Aug. 16, 1954, ch. 736, 68A Stat. 242; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), title XXI, § 2115(c)(3), Oct. 4, 1976, 90 Stat. 1834, 1909; Pub. L. 98–369, div. A, title VII, § 722(e)(1), July 18, 1984, 98 Stat. 974.)