Partner's basis in partnership interest

[grace_889]

 I purchased 100% of a partnership interest by paying cash $1000 to the selling partner personally. . His capital account in the partnership was $350. What was my basis of interest in the partnership from the beginning? Do I use $1000 or $350?  Pls advise!

[Mike9241]

this may seem confusing but there is inside basis - what the partnership shows and outside basis. what you paid +/- your share of profit loss - distributions. now if there are depreciable assets or maybe goodwill the partnership may make a 754 election so you can get a depreciation deduction for the difference between the $1,000 you paid and the $350 shown on the partnership books.  since this seems like your new at doing partnership returns I strongly suggest you use the services of a tax pro the first year.  mess up and you'll have a never ending problem on your hands.  Also, TurboTax does not do basis calculations. 

[grace_889]

Hi, Mipatke9241:  The partnership does not hold any depreciable assets, instead has one patent and some know how.  I know the  basis for my interest in partnership is $1000.  But how do I align my outside basis of $1000 with my inside basis of $350 by making what election?  Section 743(B) , 734(b)  and section 754 election? Since I don't have depreciated properties, do I adjust the basis of patent and goodwill?  Really appreciate your further explanations.  I am an accountant professional who was puzzled by these.  Thank you!