An eligible entity that has two owners, one owner a corporation and the second owner is a disregarded entity, is by default a partnership and the entity can elect under the check-the-box regulations, to be treated as a corporation. A partner that receives a current cash distribution recognizes loss if the cash distributed is less than the partner's outside basis in the partnership immediately before the distribution. When a partner is relieved of his share of partnership liabilities, such relief is treated as a cash distribution which increases the partner's outside basis