How is my adjusted tax basis determined for computing gain or loss?
Generally, your tax basis is the original amount paid for the interest, increased by the cumulative amount of income and gain reported on your Schedules K-1, and reduced by any cumulative loss, deduction and credit reported on your Schedules K-1. Tax basis is also reduced (but not below zero) by the cumulative amount of distributions received from the partnership. Schedule K-1 Item L – Partner’s Capital Account Analysis provides an approximation of ending tax basis at December 31 for an original investor.
