If any gain or loss from the distribution is recognized by the partner, it must be reported on their return for the tax year in which the distribution is received. An operating agreement partnership group can be excluded if the participants in the joint production, extraction, or use of property meet all the following requirements. An investing partnership can be excluded if the participants in the joint purchase, retention, sale, or exchange of investment property meet all the following requirements. Other partnerships generally have the option to file electronically.

Under the Modified Outside Basis method, the partnership determines, or the partner provides, the partner’s adjusted basis in the partnership interest, and subtracts the partner’s share of partnership liabilities. The amount of the partner’s tax basis capital account at the beginning and end of the tax year at issue. “to the extent provided by form or the accompanying instructions, taxpayer must provide any additional information that may be required to apply particular provisions of subtitle A of the Code to the partner with respect to items related to the partnership”