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Transfer of Basis??


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A father-son partnership.  Father transfers part-ownership of the entity to his son, and for the sake of simplicity, assume the amount is less than the gift tax threshold, maybe $14,000 would be a good amount for purposes of this discussion.

Transfer is apparently tax-free for tax purposes.  But how about basis?

Rules for basis include additions for non-taxable "income" and subtractions for non-deductible "expenses".  This is clear from the rules for basis.  However, does the above calculation qualify to be included in the basis for both father and son?

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