Partner’s Share of Company Liabilities

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If a partner’s share of partnership liabilities increases, or a partner’s individual liabilities increase because he or she assumes partnership liabilities, this increase is treated as a contribution of money by the partner to the partnership. However, a partner’s basis in a partnership is only increased by an increase in partnership liabilities that:

(1) create or increase the partnership’s basis in any of its assets, (2) gives rise to a current deduction to the partnership, or (3) is a nondeductible, noncapital expense of the partnership.


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