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Finally, there are exceptions and additioanlly information for both kind of distribution.

The partners basis in the property becomes whatever his basis in the partnership was before distribution. When a partnership distribution is in the form of cash, gain must be recognized by the distributee partner to the extent that the money received exceeds the partner's adjusted basis in the partnership interest at the time of the distribution. Section provides the rules for determining the basis of property received in a distribution. Gain or loss recognized as a result of a distribution is considered a gain or loss from the sale or exchange of a partnership interest.

Although distributions or allocation of partnership losses may reduce a partners basis in the partnership interest to zero, the continuing interest in the partnership remains the same e.


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