K-1 from a Partnership

[yekasi]

Hello.

My wife has a partnership with her brother that owns a condo.  The partnership is straight forward, just rental income and rental expenses.  At the end of the tax year, each of them gets a schedule K-1 (form 1065) and we each take the K-1 and report it to our personal tax return.  This has been the case for us since the condo was purchased and owned by the partnership.

This year, i bought TurboTax Home and Business and attempting to do this tax return myself.  I think i got everything correct by comparing the 2020 tax return and all are lining up except one thing.

In my 2020 K-1 (prepared by accountant), Box L has a Beginning Capital Account value which is somewhat near what the condo is worth as an asset.   With TurboTax generated K-1 for 2021, i am unable to get the Beginning capital account to show a value. 

My balance sheet is in balance for all 3 categories, "Income Recon", "Balance Sheet", and Capital Recon". 

Clicking the EDIT of the "Balance Sheet" -> "Quick Entry", i am able to see the "Total Assets" line at the bottom to show Beginning of year as $491401 and end of year to show $474692.  The beginning of year value $491401 divided by half does match the 2020 Schedule K-1 Box L "Ending Capital Account" as $245701.  So i know my balance sheet looks okay in turbotax. 

What is the significance of this begin/end of year value on a schedule K-1 thats generated by TurboTax? And how do i make it show a value ?

Thanks

[DianeW777]

For the personal/individual return the capital account is just for information purposes since the Form 1065 will be filed with the detail of the partnership status.  The basis in the partnership is important because a loss cannot be larger than the basis in the partnership due to the 'At Risk' limits.

• IRS Publication 925

A partner's outside basis includes a partner's share of liabilities whereas a partner's capital account does not (Assets minus Liabilities equals Capital).  Any losses in excess of the partner's tax basis are disallowed (Regs. Sec. 1.704-1(d)) and are carried forward indefinitely for as long as the partner remains in the partnership.

[yekasi]

Thanks.  In this case, is there anyway I can make TurboTax go show the value in the generated k-1 from the partnership? I would like to make the value show up so if I can. 

Thanks

[PatriciaV]

Yes, you can manually enter the tax-basis beginning balance for each Partner on the Schedule K-1 Worksheet (Sch K-1 Wks in Forms Mode).

If the prior year ending balance didn't carry over, you will need to right-click the "Beg of year" box under Capital and select Override in order to enter the amount. Scroll down to repeat for all Partners.

Be sure to enter all contributions, distributions, other adjustments, and partner's share of liabilities under each Partner in the Partner/Member Information section of Business Info. TurboTax will calculate the ending balance based on all info allocated to each Partner and display this info on Schedule K-1 Section L.