If you contribute cash instead of appreciated stock, you get a higher basis, which lets you claim bigger tax benefits and more flexibility down the line.
What is outside basis?
Your outside basis is basically what the IRS considers your cost in the Craft Pod partnership.
It starts with what you put in: cash + the carryover basis of any property (like stock) you contribute.
It goes up if you earn income or add more money, and goes down if you take losses or distributions.
Why does it matter?
Your outside basis limits how much you can deduct now and how much you can take out tax-free later.
Higher basis = more deductions now + bigger tax-free distributions later.
Why does cash usually create more basis than stock?
Cash counts dollar-for-dollar toward basis.
(You contribute $1M cash → you have $1M basis.)
Stock only counts its original tax basis, not its current market value.
(You contribute $1M worth of stock with a $50K basis → you only get $50K basis.)
So: contributing cash usually gives you a much higher starting basis.
Why does higher basis help in Craft Pod?
Because:
You can deduct more of the bonus depreciation (write-off) in the first year.
Those deductions can offset other passive income you have.
Any extra losses carry forward to future years if your basis isn’t high enough yet.
Other perks of higher basis:
You can take tax-free distributions up to your basis.
You’ll owe less tax when you eventually redeem your share.
You can absorb more losses before hitting IRS limits on “at-risk” deductions.
Please read our full disclosures before making an investment decision.