In many simple cases, a partner’s tax basis in his partnership interest (so-called “outside basis”) will equal his pro rata share of the partnership’s tax basis in its assets (so-called “inside basis”). However, there are various transactions that may cause a disparity between inside basis and outside basis to occur.
For example, if a person purchases a partnership interest at a valuation that is higher than the partnership’s inside basis, the purchaser’s outside basis will be greater than his share of the partnership’s inside basis.