a tax return is not a financial statement, so even if you put land on the balance sheet it would create problems if it were adjusted periodically to FMV - which is not required and has no effect on taxes but messes up the computation of what each partner's tax basis is in the partnership unless there is a supplemental schedule detailing it which I don't think can be done in TT Buisness. if you had looked at form 1065 you would see line 11 - Land. the offset to land is to the capital a/c's. since inherited, the FMV of land would go on line 11 with line 21 partner's capital reflecting the (same amount) offset. after that line 21 gets adjusted for all activity as does schedule L on each k-1. each year's return line 21 should be the same as line 9 on schedule M-2.
Keep it simple. Forget about the balance sheet if you are not required to prepare it.
