- 6 - losses incurred in 2002, 2003, and 2004 is new matter and therefore acknowledges that he bears the burden of proof with respect to this issue. Section 704(d) limits the deductibility of a partner’s distributive share of partnership losses. Those losses are deductible only to the extent of the adjusted basis of the partner’s interest in the partnership. Sennett v. Commissioner, 80 T.C. 825 (1983), affd. 752 F.2d 428 (9th Cir. 1985). A partner’s adjusted basis in the partnership is essentially the partner’s contribution to the partnership increased by the partner’s distributive share of partnership income and decreased by all cash distributions and the partner’s distributive share of partnership losses. Sec. 705(a). If a partner’s distributive share of partnership losses is greater than the partner’s available adjusted basis, the excess loss cannot be deducted in that year but must instead be carried forward until the partner has an adjusted basis sufficient in amount to offset the amount of the loss. See sec. 1.704-1(d)(1), Income Tax Regs. Respondent contends that petitioner, notwithstanding her obligation to contribute $60,000 to the Tripp partnership pursuant to the partnership agreement, failed to establish that (1) she made such an initial capital contribution (which would have given her a basis in her partnership interest), or (2) she subsequently paid any partnership liabilities which would be considered capitalPage: Previous 1 2 3 4 5 6 7 8 9 10 11 NextLast modified: November 10, 2007