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ILLMAS

Reconciling capital account

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Hopefully someone can shed some light and see If we have a problem here:

Balance sheet

Capital Account  2017 was -500,000

Partner A ending was -200,000 40%

Partner B ending was -100,000 20%

Partner C ending was -50,000 10%

D and E was -150,000 15% and 15%

Totaling -500,000 which matches to balance capital account 

Partner D and E walked away in 2017 and they were issued a final K-1 (no sale)

In 2018 the partnership had a loss of 200,000 so the capital account increased to -700,000

Partner C sold their interest to A & B so 10% was split between A & B and ownership % was adjusted.

Capital Account  2018 was -700,000

Partner A ending was -350,000 75%

Partner B ending was -150,000 25%

Partner C ending was -50,000 0% final k-1

Total ending capital of -$550,000, so I have a difference capital account-ending partners capital = -150,000 (D & E ending capital) My question is, does the partners ending capital account has to match the balance capital account?

In 2019 the difference is now the sum of partners C, D & E = -200,000, it seems the tax program does not transfer the amounts after a K-1 is marked final and that ending capital is lost.  I only have one 1065 client with positive capital account, so this is a new one for me, I was given a copies of prior years so I was able to trace things back.  If it doesn’t matter if they don’t have to match, them I am okay.

Thank you 

MAS

 

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