--- /sites/all/modules/taxonomy_menu/taxonomy_menu.module	Thu Dec 23 16:40:54 2010
+++ /sites/all/modules/taxonomy_menu/taxonomy_menu.module	Sun Jan 09 16:43:45 2011
@@ -538,11 +538,12 @@
  *     'mlid' => if this is filled in then the mlid will be updated
  */
 function _taxonomy_menu_save($item) {
+  global $base_path;
   $insert = TRUE;
   //create the path.
   //use url to create he inital path
-  //we need to remove the first '/' so menu_link_save will work correctly
-  $path = ltrim(taxonomy_menu_create_path($item['vid'], $item['tid']), '/');
+  //we need to remove the first '/' (and the subdirectory, if there is one) so menu_link_save will work correctly
+  $path = ltrim(taxonomy_menu_create_path($item['vid'], $item['tid']), $base_path);
   // get the parent mlid: this is either:
   // - the parent tid's mlid
   // - the vocab menu item's mlid