ILLMAS Posted July 31, 2020 Report Share Posted July 31, 2020 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 Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted July 31, 2020 Author Report Share Posted July 31, 2020 M-2 is not required in this example, Sch B question 4 is marked yes FYI Quote Link to comment Share on other sites More sharing options...
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