
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC705]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
                 Subchapter K--Partners and Partnerships
 
                 PART I--DETERMINATION OF TAX LIABILITY
 
Sec. 705. Determination of basis of partner's interest


(a) General rule

    The adjusted basis of a partner's interest in a partnership shall, 
except as provided in subsection (b), be the basis of such interest 
determined under section 722 (relating to contributions to a 
partnership) or section 742 (relating to transfers of partnership 
interests)--
        (1) increased by the sum of his distributive share for the 
    taxable year and prior taxable years of--
            (A) taxable income of the partnership as determined under 
        section 703(a),
            (B) income of the partnership exempt from tax under this 
        title, and
            (C) the excess of the deductions for depletion over the 
        basis of the property subject to depletion;

        (2) decreased (but not below zero) by distributions by the 
    partnership as provided in section 733 and by the sum of his 
    distributive share for the taxable year and prior taxable years of--
            (A) losses of the partnership, and
            (B) expenditures of the partnership not deductible in 
        computing its taxable income and not properly chargeable to 
        capital account; and

        (3) decreased (but not below zero) by the amount of the 
    partner's deduction for depletion for any partnership oil and gas 
    property to the extent such deduction does not exceed the 
    proportionate share of the adjusted basis of such property allocated 
    to such partner under section 613A(c)(7)(D).

(b) Alternative rule

    The Secretary shall prescribe by regulations the circumstances under 
which the adjusted basis of a partner's interest in a partnership may be 
determined by reference to his proportionate share of the adjusted basis 
of partnership property upon a termination of the partnership.

(Aug. 16, 1954, ch. 736, 68A Stat. 242; Pub. L. 94-455, title XIX, 
Sec. 1906(b)(13)(A), title XXI, Sec. 2115(c)(3), Oct. 4, 1976, 90 Stat. 
1834, 1909; Pub. L. 98-369, div. A, title VII, Sec. 722(e)(1), July 18, 
1984, 98 Stat. 974.)


                               Amendments

    1984--Subsec. (a)(3). Pub. L. 98-369 substituted ``for any 
partnership oil and gas property to the extent such deduction does not 
exceed the proportionate share of the adjusted basis of such property 
allocated to such partner under section 613A(c)(7)(D)'' for ``under 
section 611 with respect to oil and gas wells''.
    1976--Subsec. (a)(3). Pub. L. 94-455, Sec. 2115(c)(3), added par. 
(3).
    Subsec. (b). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ``or 
his delegate'' after ``Secretary''.


                    Effective Date of 1984 Amendment

    Section 722(e)(3)(A) of Pub. L. 98-369 provided that: ``The 
amendment made by paragraph (1) [amending this section] shall take 
effect on January 1, 1975.''


                    Effective Date of 1976 Amendment

    Amendment by section 2115(c)(3) of Pub. L. 94-455 effective on Jan. 
1, 1975, and applicable to taxable years ending after Dec. 31, 1974, see 
section 2115(f) of Pub. L. 94-455, set out as a note under section 613A 
of this title.

                  Section Referred to in Other Sections

    This section is referred to in section 776 of this title.
