§ 705. Determination of basis of partner’s interest
(a)
General rule
The adjusted basis of a partner’s interest in a partnership shall, except as provided in subsection (b), be the basis of such interest determined under section
722 (relating to contributions to a partnership) or section
742 (relating to transfers of partnership interests)—
(2)
decreased (but not below zero) by distributions by the partnership as provided in section
733 and by the sum of his distributive share for the taxable year and prior taxable years of—
(b)
Alternative rule
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.