It does not reduce basis, or rather it both increases and decreases basis - a wash.  In order to pay the deductible interest (which reduces basis), the taxpayer paid it personally (a contribution which increases basis).

Assuming it financed an operating nonpassive business, add it to the related K-1 input screen as a nonpassive loss in the 'Separately Stated Income and Deductions' section and also add that amount in the 'Basis Limitation' section as an other item that increases stock basis.