CA state taxes not dividing the Capital Account at start between partners

Forum|Forum|3 years ago
March 15, 2023
1 reply
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I'm doing the return for a partnership (trust) for my daughter and her cousin.
I followed the step-by-step instructions, but I can't figure out how to configure the correct figures for the Capital Account at the beginning of the year.
The forms/steps ask me for the starting amount for the partnership, and I've filled in that it's split 50/50, but Turbo Tax just takes the whole amount and puts it in each girls' starting figure instead of half.

TurboTax Business Windows

PatriciaV

Employee

Assuming you are preparing Form 1065 for a Partnership and not Form 1041 for a trust (which does not report capital balances), you can enter or revise capital accounts for each partner in Forms Mode.

Open the return and click the Forms icon in the TurboTax header.
Look for Sch K-1 Wks in the left column; click on the name to open the form in the large window.
Under the section Enter Partner Information Below look for two columns for "Capital" and "Basis."
Enter the allocated beginning capital balance on the "Beg of year (tax basis)" line. You may change any numbers in a blue or green font. Black numbers are calculated and cannot be changed.
To move to the next partner, use the grey bar on the right margin of the form.
When you're finished, click Step-by-Step in the header to return to the main screens.

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achiappanzaAuthor

Thanks, but I tried that. It's not editable on the individual K1s, and it won't allocate only 50% from the full partnership section.

AbrahamT

Just to clarify, is this an issue with the state of California specifically or it won't show up in the forms mode for the federal either?

Watch this

In the input under Business Info/Federal Partner Info / Enter Owner Percentage for each partner like this

then Federal taxes/Balance Sheet/ Partner's Capital like this

then this should flow to the K-1's to each of the individual partners like this

This is how it is done for the federal. Whether the beginning capital balances flow through to the state of California or not should not bear any taxable effect.

[Edited 03/17/2023 1:44 pm PST]

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