UPE and basis limitation

[BHoffman]

Can't quite get my brain in gear and hoping for some help.

New partnership. Partner 1 paid lots of expenses out of pocket and wants to claim the deduction through Unreimbursed Partnership Expenses. The operating agreement spells out that UPE is expected and allowed.

If this partner has no partnership (inside) basis, can he still write off the UPE against his other income?

I believe the fact that he paid expenses out of pocket increases his "outside" basis and therefore allows him to take the loss.

I think this is an easy answer, but I can't figure it out.

Thanks for your guidance.

[Corduroy Frog]

Should Be a Wash

...if the UPE is legit to begin with.

I don't know a lot of statutes that replace common sense (and there are lots of them). But I would be hard pressed to value the basis as anything except the partner putting up the cash as a "contribution" (of sorts), and then deducting an equal amount of expense.

[BHoffman]

Yep. UPE is not limited to basis.

Got some nice help from you kind folks on this board. Thanks to all