Skip to main content
Level 2
July 4, 2023
Question

UPE and basis adj

  • July 4, 2023
  • 1 reply
  • 8 views

Current year UPE exceeds a partner's basis resulting in basis limited disallowed partner expenses. Is an adjustment to increase outside basis "Additional amounts invested in activity in current year" on the 1040 (K-1 basis input section) appropriate here? It seems such can be treated as a deemed capital contribution; however, guidance to support treatment is not clear.

This topic has been closed for replies.

1 reply

Level 15
July 4, 2023

I'm not sure of the answer, but wouldn't it just be a suspended expense/loss, just like if the K-1 had a loss that was limited due to Basis? 

I understand your thought about a deemed capital contribution.  I haven't seen anything that allows an option/election to treat UPE as a capital contribution, but maybe I just haven't heard of it.

bcarrilloAuthor
Level 2
July 14, 2023

Thanks for the feedback.