Final answer:
A partner's outside basis must be reduced by distributions, pass-through losses, and pass-through expenditures that aren't deductible for tax purposes, so the correct answer is all of the above.
Step-by-step explanation:
A partner's outside basis in a partnership must be reduced by several factors. Specifically, a partner's outside basis must be reduced by: distributions, pass-through losses, and pass-through expenditures even if they aren't deductible for tax purposes. Therefore, the correct answer to this question is D) all of the above.
Distributions are cash or property that the partner withdraws from the partnership. Pass-through losses refer to the partner's share of the partnership's losses, which are reported on the partner's tax return and reduce the outside basis. Pass-through expenditures that are not deductible, such as certain entertainment expenses, also reduce the partner's outside basis even though these expenditures do not provide a tax benefit at the time.