[Code of Federal Regulations]
[Title 26, Volume 8]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.742-1]

[Page 530]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Determination of Tax Liability--Table of Contents
 
Sec. 1.742-1  Basis of transferee partner's interest.

    The basis to a transferee partner of an interest in a partnership 
shall be determined under the general basis rules for property provided 
by part II (section 1011 and following), subchapter O, chapter 1 of the 
Code. Thus, the basis of a purchased interest will be its cost. The 
basis of a partnership interest acquired from a decedent is the fair 
market value of the interest at the date of his death or at the 
alternate valuation date, increased by his estate's or other successor's 
share of partnership liabilities, if any, on that date, and reduced to 
the extent that such value is attributable to items constituting income 
in respect of a decedent (see section 753 and paragraph (c)(3)(v) of 
Sec. 1.706-1 and paragraph (b) of Sec. 1.753-1) under section 691. See 
section 1014(c). For basis of contributing partner's interest, see 
section 722. The basis so determined is then subject to the adjustments 
provided in section 705.