The initial cost base of properties contributed to a partnership shall be equal to the cost base of the contributing partner.

If a partner retires from a partnership and receives a distribution causing him to make profit by disposing of his share in the partnership, the cost base of the partnership's profiting assets shall be adjusted by increasing the amount of profit made, provided that the value of such assets does not exceed their market value. Cost base adjustments are distributed among assets according to the percentage difference between the cost base and the market value.

If a partner retires from a partnership and receives a distribution causing him to incur a loss by disposing of his share in the partnership, the cost base of the partnership's losing assets shall be adjusted by reducing the value of the loss incurred, provided that the cost base of such assets is not less than zero. Cost base adjustments are distributed among assets in accordance with the percentage difference between the cost base and the market value.

For the purposes of paragraphs (b) and (c) of this Article, a profiting asset is an asset that has a cost base lower than the market value, and a losing asset is an asset that has a cost base higher than the market value.