Should each partner's initial cash contribution for start up/operating costs be recorded as just business income/loss (K-1 form) or also as "Beginning capital account?"

[DawnC0 · Accepted solution]

The initial contributions are to the capital account, which is an equity account of a partnership. It contains the following transactions:

• Initial and subsequent contributions by partners to the partnership, in the form of either cash or the market value of other types of assets
• Profits and losses earned by the business, and allocated to the partners based on the provisions of the partnership agreement and 
• Distributions to the partners

Startup and operating costs are included in the profit or loss of the partnership and the partner's share is added to or subtracted from their capital account.