26 U.S.C. § 705: Determination of basis of partner’s interest

taxable income of the partnership as determined under section 703(a), income of the partnership exempt from tax under this title, and the excess of the deductions for depletion over the basis of the property subject to depletion; losses of the partnership, and expenditures of the partnership not deductible in computing its taxable income and not properly chargeable to capital account; and decreased (but not below zero) by the amount of the partner’s deduction for depletion for any partnership oil and gas property to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such partner under section 613A(c)(7)(D). The Secretary shall prescribe by regulations the circumstances under which the adjusted basis of a partner’s interest in a partnership may be determined by reference to his proportionate share of the adjusted basis of partnership property upon a termination of the partnership.