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Commissioner, T.C. Memo. 1988-195; Lynch v. Commissioner, T.C.
Memo. 1982-305; Abraham v. Commissioner, T.C. Memo. 1970-304. A
partner's adjusted basis in his partnership interest is determined
under section 705.
A partner's initial basis in a partnership is determined by
the amount of money contributed and the adjusted basis of any other
type of property contributed. Sec. 722. The partner's basis in
the partnership is then adjusted upward for the partner's
distributive share of separately stated income items, and downward
by distributions of money (including the relinquishment of
liabilities) or the adjusted basis of other property distributed,
and the partner's distributive share of losses and nondeductible
expenses. Sec. 705; La Rue v. Commissioner, 90 T.C. 465, 477
(1988).
Petitioner claims a $121,500 basis2 in the partnership due to
the "value" of his interest in accounts receivable and work in
progress for work he performed for clients of the law firm.
Petitioner explains on brief:
A partner's basis for his interest in a
partnership depends on how he acquired it. It
may consist of the amount of cash he
2 At trial, petitioner calculated his basis in his
partnership interest by adding the amount of accounts receivable
and costs associated with petitioner's clients ($93,744.68) with
current work in progress ($65,485.20), for a total of
$159,229.88. Petitioner then applied a collection rate which
reduced the total figure to $121,500.
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