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Solved

does TT Partner Capital Account

Forum|Forum|4 years ago
February 24, 2022
1 reply
32 views

I am having great difficulty in wrapping my head around the tax basis Partner Capital Account rules what with the book basis and now the tax basis.

I assume Turbotax Business 2020 and 2021 creates a tax basis Partner Capital Account after the adjustments in Sections M-1 and M-2? Is this correct?

Thanks

D

TurboTax Business Windows

Best answer by PatriciaV

Yes, electing to complete Schedules M-1 and M-2 will complete Schedule K-1 Section L for each partner. Note this is the "inside basis" of tax basis capital for the partner, which may not be the same for the partner's "outside" basis due to transactions and income/expense allocations that may be specific to that partner's investment in the partnership. The IRS provides a worksheet to assist in tracking basis (see link below).

Additional info:

IRS Form 1065 Schedule K-1 Basis Rules

IRS Worksheet for Adjusting the Basis of a Partner's Interest in the Partnership

PatriciaVAnswer

Level 15

Yes, electing to complete Schedules M-1 and M-2 will complete Schedule K-1 Section L for each partner. Note this is the "inside basis" of tax basis capital for the partner, which may not be the same for the partner's "outside" basis due to transactions and income/expense allocations that may be specific to that partner's investment in the partnership. The IRS provides a worksheet to assist in tracking basis (see link below).

Additional info:

IRS Form 1065 Schedule K-1 Basis Rules

IRS Worksheet for Adjusting the Basis of a Partner's Interest in the Partnership

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