§219.  Optional adjustment to basis of partnership property

A.  General rule.  The basis of partnership property shall not be adjusted as the result of a transfer of an interest in a partnership by sale or exchange or on the death of a partner unless the election provided by R.S. 47:220.1 (relating to optional adjustment to basis of partnership property) is in effect with respect to such partnership.  

B.  Adjustment to basis of partnership property.  In the case of a transfer of an interest in a partnership by sale or exchange or upon the death of a partner, a partnership with respect to which the election provided in R.S. 47:220.1 is in effect shall:

(1)  increase the adjusted basis of the partnership property by the excess of the basis to the transferee partner of his interest in the partnership over his proportionate share of the adjusted basis of the partnership property, or

(2)  decrease the adjusted basis of the partnership property by the excess of the transferee partner's proportionate share of the adjusted basis of the partnership property over the basis of his interest in the partnership.  Under regulations prescribed by the collector, such increase or decrease shall constitute an adjustment to the basis of partnership property with respect to the transferee partner only.  A partner's proportionate share of the adjusted basis of partnership property shall be determined in accordance with his interest in partnership capital and, in the case of an agreement described in R.S. 47:204 C(2) (relating to effect of partnership agreement on contributed property), such share shall be determined by taking such agreement into account.  In the case of an adjustment under this subsection to the basis of partnership property subject to depletion, any depletion allowable shall be determined separately for the transferee partner with respect to his interest in such property.  

C.  Allocation of basis.  The allocation of basis among partnership properties where Subsection B of this Section is applicable shall be made in accordance with the rules provided in R.S. 47:220.2.  

Added by Acts 1958, No. 441, §2.