### Question
How is the "built-in loss" defined?


### Answer
The term **built-in loss** is defined in *26 U.S.C. § 704* as follows -

> the excess of the adjusted basis of the property (determined without regard to subparagraph (C)(ii)) over its fair market value at the time of contribution

#### Citation:
  - *26 U.S.C. § 704*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter K-Partners and Partnerships > PART I-DETERMINATION OF TAX LIABILITY**

