Page 204 - Large Business IRS Training Guides

Partner’s Basis

• Deductible business interest expense and excess

business interest expense are subject to IRC § 704(d)

basis limitation.

• A partner’s basis in its partnership interest is reduced

(but not below zero) by the amount of excess business

interest expense allocation from the partnership.

• If the partner disposes of the partnership interest prior to

fully utilizing the EBIE, the partner’s basis is increased,

immediately before such disposition, by the amount that

any basis reductions exceed any amount of excess

interest expense that has been treated as paid by the

partner.

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