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ppeteet
New Member

Can I enter "zero" as an adjusted cost basis for sale of interest in a partnership when the cumulative adjustment to basis is more negative than the original cost ?

 
1 Reply
Rick19744
Level 12

Can I enter "zero" as an adjusted cost basis for sale of interest in a partnership when the cumulative adjustment to basis is more negative than the original cost ?

That would be what I recommend.  However the facts are not clear on how to handle the other aspect of this disposition:

  • Technically your basis cannot go negative.
  • Based on bullet number 1, do you have suspended losses?
  • If you do have suspended losses, you can only take the losses to the extent of your basis; effectively arriving at a zero basis.  Anything remaining will be lost; no economic loss.
  • If you don't have suspended losses you will need to pick up the "negative" basis amount as capital gain on Schedule D and the applicable form 8949.
*A reminder that posts in a forum such as this do not constitute tax advice.*

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