Code section 704(d), showing amendments by Public Law 115-97 on December 22, 2017, effective for partnership taxable years beginning after December 31, 2017.

SEC. 704. PARTNER’S DISTRIBUTIVE SHARE

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(d) Limitation on allowance of losses.

(1) In general.

A partner’s distributive share of partnership loss (including capital loss) shall be allowed only to the extent of the adjusted basis of such partner’s interest in the partnership at the end of the partnership year in which such loss occurred.

(2) Carryover.

Any excess of such loss over such basis shall be allowed as a deduction at the end of the partnership year in which such excess is repaid to the partnership.

(3) Special rules.

(A) In general.

In determining the amount of any loss under paragraph (1), there shall be taken into account the partner’s distributive share of amounts described in paragraphs (4) and (6) of section 702(a).

(B) Exception.

In the case of a charitable contribution of property whose fair market value exceeds its adjusted basis, subparagraph (A) shall not apply to the extent of the partner’s distributive share of such excess.