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ILLMAS

Negative capital account 2018 & 2019

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Has anybody had to amend a 1065/K-1 for choosing the wrong capital tax basis (tax basis, Gaap, etc...) and not including the reporting it on line 20 using code AH?  I've been going back and forth with reference material and seems the capital reporting requirements will be in effect until 2020.

Source

https://www.journalofaccountancy.com/news/2019/dec/irs-postpones-partnership-reporting-requirements-201922618.html

 

https://www.irs.gov/pub/irs-drop/n-19-66.pdf

 

Can someone chime in to see it would okay to leave as is for 2018 and 2019 and make the election in 2020 and to include line 20 code AH?

Thanks

MAS

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If amending 2018 and 2019 would make more than a de minimus change to any partner's tax liability, then I would amend. or consider whether a 3115 would be appropriate.

If,not, then I would fix it going forward.

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45 minutes ago, cbslee said:

If amending 2018 and 2019 would make more than a de minimus change to any partner's tax liability, then I would amend. or consider whether a 3115 would be appropriate.

If,not, then I would fix it going forward.

Trying to figure out if it will require an amendment to the k-1 in 2018, 2019 has not been prepared yet.  If the case the operating agreement states "(partners non-recourse debt) shall be allocated to members who bears the economic risk of loss for such debt in accordance with Treasury Regulations section 1.704"  If understand this correctly, it really makes no difference if the partner capital account is negative because the IRS would respect the operating agreement, I am interpreting this correctly? 

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