1065-US: Entering partners' capital for Schedule L when Schedule L does not use the same capital account accounting method as Schedules K-1 and M-2 (FAQ)

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Question

Where do I enter partners' capital for Schedule L when Schedule L does not use the same capital account accounting method as Schedules K-1 and M-2?

Answer

Use the following fields in Screen L in the Balance Sheet folder if the beginning or ending capital accounts reported on Schedule L differ from amounts reported on Schedule M-2.

Notes

  • The IRS has clarified in the instructions to Form 1065 and on its website in Form 1065 - Frequently Asked Questions that the amounts on a partnership's Schedule M-2 should equal the totals of the amounts reported in item L of Schedule K-1 for all partners. Therefore, UltraTax CS automatically uses amounts entered in Screen M1M2 in the Balance Sheet folder for both Schedules K-1 and M-2.
  • To access IRS frequently asked questions on the IRS website from a client's return, choose Help > Tax Subject Index, click the Web Form Instructions option, highlight the IRS Tax Information for Partnerships link, and click Go To.

Related topic: Partner capital FAQs (1065)

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