Form 7217 is the Partner's Report of Property Distributed by a Partnership. Any partner who receives property other than cash from a partnership, in a liquidating or non-liquidating distribution, files it with their tax return to report their basis in that property, including any section 732 adjustment. You file a separate form for each date you received property, and it's due with your return.
This guide follows the Instructions for Form 7217 (December 2024), as of October 2026. The IRS says to use the December 2024 version for tax years beginning in 2024 or later until a new revision is issued.
Who files and who doesn't
If you're a partner and received distributed property subject to section 732 during the year, you file. The instructions rule out a few cases:
- Distributions made up only of cash, or marketable securities treated as cash under section 731(c).
- Payments to you for services in a capacity other than as a partner under section 707(a)(1).
- Transfers treated as disguised sales under section 707(a)(2)(B).
Properties received on different days need separate forms, even when they're part of the same transaction.
Where the numbers come from
| Line | What to enter | Source |
|---|---|---|
| 3 | Partnership's aggregate basis in the distributed property just before the distribution | Your Schedule K-1, box 19, code C, or a section 732(d) statement |
| 4 | Your outside basis in the partnership just before the distribution | Your own calculation. It isn't on the K-1 |
| 5a | Cash received or deemed received, including section 752(b) deemed distributions | K-1 box 19, code A |
| 5b | Fair market value of marketable securities received | K-1 box 19, code A |
| 9 | Line 4 minus line 5a, not below zero, plus any section 737 gain | Calculated |
| 10 | Basis to allocate to the property: the smaller of line 3 or line 9 if non-liquidating; line 9 if liquidating | Calculated |
Line 4 is where the work is. The partnership doesn't report your outside basis, so you have to track it yourself from contributions, your share of income and losses, and earlier distributions. The partner's instructions for Schedule K-1 explain how.
The basis cap in a worked example
The instructions give this one. Jordan is a partner in Delta with an outside basis of $10,000. Jordan receives a non-liquidating distribution of $4,000 in cash plus property the partnership held with a basis of $8,000. Jordan's basis in the property is limited to $6,000: the $10,000 outside basis less the $4,000 of cash.
| Step | Amount |
|---|---|
| Outside basis before the distribution (line 4) | $10,000 |
| Cash distributed (line 5a) | $4,000 |
| Remaining outside basis (line 9) | $6,000 |
| Partnership's basis in the property (line 3) | $8,000 |
| Jordan's basis in the property (line 10, smaller of 3 and 9) | $6,000 |
In a liquidating distribution it works the other way too: the property's total basis is pushed up or down so it equals your outside basis after cash, and the result is spread across the assets under section 732(c). In the IRS's second example, basis goes first to inventory items up to the partnership's basis, then to the other assets.
The liquidating example
The second IRS example shows the allocation. Alex has an outside basis of $750 and receives $100 of cash, inventory, asset X and asset Y in liquidation of the whole interest. That leaves $650 to allocate.
| Property | Partnership basis | Fair market value | Alex's basis after section 732(b) |
|---|---|---|---|
| Inventory | $100 | $200 | $100 |
| Asset X | $50 | $400 | $440 |
| Asset Y | $100 | $100 | $110 |
| Total (not including cash) | $250 | $700 | $650 |
Inventory takes its $100 partnership basis first. X and Y then get their own basis, $50 and $100, then X gets $350 of unrealized appreciation, and the last $50 is split by fair market value: $40 to X and $10 to Y. That's exactly the kind of working column (e) expects.
Part II: property by property
Part II lists each distributed asset with the partnership's basis in column (b), boxes in column (c) for special adjustments under sections 732(d), 732(f), 734(b) and 743(b), fair market value in column (d), and your basis after section 732 in column (e). Column (b) should total to line 3 and column (e) to line 10. Section 732(f) generally only applies if you're a corporation receiving stock in another corporation in which you hold at least 80% of the vote or value.
Section 751(b) and other boxes
Line 2 asks whether any part of the distribution is treated as a sale or exchange under section 751(b), which applies when you swap your share of unrealized receivables or substantially appreciated inventory for other property, or the reverse. If it does, attach a statement showing the income, gain or loss. Line 8 asks whether you paid US tax on any gain from receiving cash above your outside basis.
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Filing it
- Get the partnership's box 19 detail and any section 732(d) statement.
- Work out your outside basis immediately before the distribution.
- Complete one Form 7217 for each distribution date.
- Attach it to your return for the year you received the property. It's due when your return is due, including extensions.
- Keep the form with your asset records: column (e) is your starting basis for depreciation or a later sale.
If the partnership itself has to report property it received or contributed, that's a separate set of rules, and partnership return basics are on the Form 1065 page.
The verdict
Form 7217 is short but it fixes your tax basis in whatever you walked away with. Get the K-1 box 19 codes, work out the outside basis carefully, check that columns (b) and (e) tie to lines 3 and 10, and file one form per date.
Frequently asked questions
What is Form 7217?
It's the Partner's Report of Property Distributed by a Partnership, used to report your basis in distributed property including section 732 adjustments.
Who has to file Form 7217?
Any partner who received property other than cash, or marketable securities treated as cash, from a partnership in the tax year.
Do I file one Form 7217 per distribution?
You file a separate Form 7217 for each date you received distributed property, even if it's part of one transaction.
When is Form 7217 due?
It's attached to your tax return and due when the return is due, including extensions.
Is my outside basis on Schedule K-1?
No. The instructions say the basis of your partnership interest isn't reported on the K-1, so you calculate it.
Do I file Form 7217 for a cash-only distribution?
No. Don't file it if the distribution was only cash or marketable securities treated as cash under section 731(c).
