After making the adjustment to change to tax basis for the K-1's, how do you change the balance sheet back to book basis?

[JulieBS]

The balance sheet was in balance for both 2019 and 2020, after making the basis adjustment both are out of balance by the amount of the adjustment.

[Anonymous_]

The balance sheet on your 1065?

I will page @Rick19744 

[Rick19744]

The mandatory change to reporting on a tax basis does cause some confusion (and heartache). 

I am not on a windows environment, so not able to provide input direction (TT Business only operates in a windows environment).

Some thoughts and comments:

• Keep in mind that the balance sheet is still required to be reported based on the entity books and records which is typically not tax basis.
• Not clear, when you ask "....how do you change the balance sheet back to book basis".  I assume that you continued to report the balance sheet (schedule L) based on your internal books and records; which is why you are not in balance?
  • Assume that it is partners capital that is the only item out of balance?
  • Hopefully you did not change other balance sheet items to tax basis?
• Schedule M-2, which used to tie to the balance sheet, no longer ties to the balance sheet since this is now reported on a tax basis.
  • The beginning and ending balances should tie to the total of the beginning and ending for all the partner K-1's.  I assume that TT has some kind of worksheet that will provide this proof / reconciliation?
• Since I can't see how TT completes the balance sheet, you may need to manually adjust the partners capital account on the balance sheet in order to tie to your books and records.

[Anonymous_]

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@Rick19744 wrote:

• Since I can't see how TT completes the balance sheet, you may need to manually adjust the partners capital account on the balance sheet in order to tie to your books and records.

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It can be done in the Step-by-Step Mode (screenshot below of the L&C side), but it is easier to accomplish in Forms Mode (since you can see both sides).

[JulieBS]

Ah - adjusting in the step-by-step worked.  Thanks so much!