On the partnership information worksheet under Analysis of Partner's Capital Account I have checked "Sum of invidual line items on each partner's Schedule K-1" and under Capital Account Accounting Method I have checked "Tax Basis".
For row C on each partners Schedule K-1 Item L the current year net income (loss) is the partner's profit % multiplied by financial statement income. It is not calculating the tax items on the schedule K-1 and adding them together.
I am sure I am missing a box somewhere can someone help?
For part L on page 1 of a partner's K-1 schedule, the other increases or decreases in a partner's capital account would consist of the amounts listed on page 5 of the form 1065, schedule M-2 line 4, less the amount on page 5, schedule M-2, line 7. The current year net income(loss) is the partner's share of income amounts such as ordinary income and interest income.
Thomas - thanks for the answer but not sure it answered my question. The line on Item L that states "Current year net income (loss)" I think should be items on the actual K-1 not from schedule M-2. So i think it should be line 1 of K-1 plus/minus other income/deductions on the K-1. The instructions to Schedule K-1 state to look at Notice 2019-66 and I think that notice states that this line should be the sum of taxable income items found on each partners K-1 such as line 1 income.
I have seen other tax software programs do just that. Has Turbo Tax written the software correctly?
I have learned in other posts that TurboTax does not send the information in the capital account section (part L of schedule K-1 form 1065) to the IRS anyway. Thus it does not matter that the information does not match the amounts in lines 1-20. Go with the amounts in lines 1-20.