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Unformatted text preview: For example John contributes $10,000 cash to X partnership in exchange for 25% interest in the partnership capital and profit and losses. X partnership had $2,000 liabilities of which Johns 25% share is $ 500. So Johns outside basis in the partnership interest would be 10,000+500= $ 10,500 Inside basis refers to the adjusted basis of the assets of the partnership. An inequality between inside basis and total outside basis results from certain transactions. The partnership is permitted to adjust the inside basis of its assets, thereby preserving equality between inside basis and outside basis. This adjustment to basis is accomplished by filing a Code Sec. 754 election For example is a partnership owns a warehouse with an adjusted basis of $100,000. And John buys 50% of the interest for a certain amount. Her inside basis of the share of the warehouse would be 50%*100,000 = $50,000....
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- Spring '11