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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 124817  
Subject: Re: Partnership Dissolution Date: 2/20/2002 5:46 PM
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Your ending capital account balance is not necessarily your tax basis. One usually has very little to do with the other. Basically, the ending capital account balance is just an accounting number, not a tax number.

I would disagree with the above. Unless you purchased your partnership interest from a third party, the capital account balance as shown on the partnership books and/or tax return should be your basis.

Some differences that can come up between book and tax numbers: depreciation, amortization of intangibles, cost vs. percentage depletion, cash vs. accrual methods, in the construction industry - completed contract vs. percentage of completion, accounting for non-deductible expenses (like life and health insurance, part of meals and entertainment).

It's possible to keep your books completely on the tax basis, but outside of small partnerships, it pretty rare in my experience.

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