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The determination of a partner's basis in his or her
partnership interest must be made before a partner can deduct his
or her share of partnership losses because losses cannot reduce a
partner's basis below zero. Generally, a taxpayer's basis in a
partnership includes the taxpayer's capital contributions and her
share of partnership income and liabilities, less distributions
and her share of partnership losses. See secs. 705, 752. A
partner's distributive share of partnership loss is allowed as a
deduction only to the extent of that partner's adjusted basis of
the partnership interest at the end of the tax year in which such
loss occurs. See sec. 704(d).
Automobile Expenses
During the years at issue, petitioner claimed automobile
expenses arising from automobile use on behalf of both Special
Occasions and Special O. Petitioner contends that she is
entitled to deduct automobile expenses incurred during the years
in issue. Alternatively, petitioner contends that her expenses,
if not deductible, should be included in her claimed bases for
Special Occasions and Special O.
Deductions are a matter of legislative grace, and a taxpayer
must be able to show that the deduction sought comes within the
express provisions of the statute. See New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934).
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Last modified: May 25, 2011