What is my adjusted basis in the partnership?

Your adjusted basis in the partnership (often called your outside basis) is used to determine the gain or loss on a sale, whether distributions to you are taxable, and how much of the partnership's loss you can deduct.

To calculate it, start with your initial basis (cash you contributed plus the adjusted basis of any property you contributed, plus your share of partnership liabilities) and then make annual adjustments.

• Increase the basis for additional contributions, your share of partnership taxable income and tax-exempt income, and any increase in your share of liabilities.
• Decrease the basis for cash or property distributions made to you, your share of partnership losses and nondeductible expenses, and any decreases in your share of liabilities.

Your Schedule K-1 may already include a basis computation that you can use as your adjusted basis.