---
kind: "section"
citation: "26 U.S.C. § 705"
title: "26"
title_heading: "Internal Revenue Code"
number: "705"
heading: "Determination of basis of partner’s interest"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/705"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter K — Partners and Partnerships"
  - "Part I — Determination of Tax Liability"
---

# §705. Determination of basis of partner’s interest

- (a) **General rule—** The adjusted basis of a [partner](/usc/26/761.md?p=b)’s [interest](/usc/26/856.md?p=f-1) in a [partnership](/usc/26/761.md?p=a) shall, except as provided in [subsection (b)](#b), be the basis of such [interest](/usc/26/856.md?p=f-1) determined under [section 722](/usc/26/722.md) (relating to contributions to a [partnership](/usc/26/761.md?p=a)) or [section 742](/usc/26/742.md) (relating to transfers of [partnership](/usc/26/761.md?p=a) [interests](/usc/26/856.md?p=f-1))—
  - (1) increased by the sum of his distributive share for the taxable year and prior taxable years of—
    - (A) [taxable income](/usc/26/63.md?p=a) of the [partnership](/usc/26/761.md?p=a) as determined under [section 703(a)](/usc/26/703.md?p=a),
    - (B) income of the [partnership](/usc/26/761.md?p=a) exempt from tax under this title, and
    - (C) the excess of the deductions for depletion over the basis of the [property](/usc/26/317.md?p=a) subject to depletion;
  - (2) decreased (but not below zero) by distributions by the [partnership](/usc/26/761.md?p=a) as provided in [section 733](/usc/26/733.md) and by the sum of his distributive share for the taxable year and prior taxable years of—
    - (A) losses of the [partnership](/usc/26/761.md?p=a), and
    - (B) expenditures of the [partnership](/usc/26/761.md?p=a) not deductible in computing its [taxable income](/usc/26/63.md?p=a) and not properly chargeable to capital account; and
  - (3) decreased (but not below zero) by the amount of the [partner](/usc/26/761.md?p=b)’s deduction for depletion for any [partnership](/usc/26/761.md?p=a) oil and gas [property](/usc/26/317.md?p=a) to the extent such deduction does not exceed the proportionate share of the adjusted basis of such [property](/usc/26/317.md?p=a) allocated to such [partner](/usc/26/761.md?p=b) under [section 613A(c)(7)(D)](/usc/26/613A.md?p=c-7-D).
- (b) **Alternative rule—** The Secretary shall prescribe by regulations the circumstances under which the adjusted basis of a [partner](/usc/26/761.md?p=b)’s [interest](/usc/26/856.md?p=f-1) in a [partnership](/usc/26/761.md?p=a) may be determined by reference to his proportionate share of the adjusted basis of [partnership](/usc/26/761.md?p=a) [property](/usc/26/317.md?p=a) upon a termination of the [partnership](/usc/26/761.md?p=a).

## Source credit

(Aug. 16, 1954, ch. 736, 68A Stat. 242; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), title XXI, § 2115(c)(3), Oct. 4, 1976, 90 Stat. 1834, 1909; Pub. L. 98–369, div. A, title VII, § 722(e)(1), July 18, 1984, 98 Stat. 974.)

## Notes

### Editorial Notes

### Amendments

1984—Subsec. (a)(3). Pub. L. 98–369 substituted “for any partnership oil and gas property to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such partner under section 613A(c)(7)(D)” for “under section 611 with respect to oil and gas wells”.

1976—Subsec. (a)(3). Pub. L. 94–455, § 2115(c)(3), added par. (3).

Subsec. (b). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 1984 Amendment

Pub. L. 98–369, div. A, title VII, § 722(e)(3)(A), July 18, 1984, 98 Stat. 974, provided that: “The amendment made by paragraph (1) [amending this section] shall take effect on January 1, 1975.”

### Effective Date of 1976 Amendment

Amendment by section 2115(c)(3) of Pub. L. 94–455 effective on Jan. 1, 1975, and applicable to taxable years ending after Dec. 31, 1974, see section 2115(f) of Pub. L. 94–455, set out as a note under section 613A of this title.