Mechanics of Partnership Basis Adjustments and Form 7217

2 AFSP, EA, CFP®, CPA, CRTP

Track:

Mid-career and beyond

This session equips tax pros to spot, compute and document basis adjustments in partnership, including when the partnership distributes property, which is essential for correct gain/loss calculations and downstream transactions. Using real-world scenarios, we’ll review outside basis computations and apply §732 rules: the §732(a)(2) limitation for nonliquidating distributions, §732(b) in liquidations and §732(c) allocation across multiple assets. Additionally, you’ll leave knowing exactly when Form 7217, Partner’s Report of Property Distributed by a Partnership, is required and when to submit the form.

Objectives

Upon completion of this session, you will be able to:

● Compute a partner’s outside basis immediately before and after a property distribution, including

reductions for cash and for liability decreases treated as cash

● Apply the limitation in §732(a)(2) to nonliquidating distributions and allocate the reduced aggregate

basis among multiple properties using the ordering and proportional rules in §732(c)

● Apply §732(b) to liquidating distributions by adjusting the aggregate basis of distributed properties to

equal the partner’s outside basis (net of cash) and allocating that basis across inventory and other

property under §732(c)

● Document and report basis adjustments by determining exactly when Form 7217 is required

CPE information

Duration: 100 minutes

Course level: Intermediate

Prerequisite: Familiarity with partnership taxation fundamentals

Advanced preparation: None

Delivery method: Group Internet-Based

	CPE credits	Designation	Field of study
IRS	2	AFSP	Federal Tax Law Topic
IRS	2	EA	Federal Tax Law Topic
NASBA	2	CPA	Taxes
CTEC	2	CRTP	Federal Tax Law Topic
CFP Board	2	CFP®	n/a

Instructor(s)

Larry Zimbler, MST, EA