SEE-2 - Business Entities and Considerations - Section 1.2

Apply partnership formation, basis, distribution, and flow-through rules, including the Section 721 nonrecognition rule and a partner's outside basis adjustments.

Apply the Section 721 rule that contributions of property to a partnership in exchange for an interest are generally nonrecognition events, and track a partner's outside basis as it is increased by income and contributions and decreased by distributions and losses. Distinguish a partner's distributive share reported on Schedule K-1 from an actual cash distribution, and recognise that guaranteed payments are deductible to the partnership and self-employment income to the partner.

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