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    #1

    Partners' capital accounts

    Form 1065 question.

    Should line 9 "Balance at end of year" in Schedule M-2 be equal to Line 21 "Partners' capital accounts" in Schedule L?

    What would you do if they are not equal?
    Tags: None
    #2
    Absolutely. If they're not the same, find the error and correct it.
    Roland Slugg
    "I do what I can."

    Comment

      #3
      Originally posted by Roland Slugg View Post
      Absolutely. If they're not the same, find the error and correct it.
      What would you do if you are not able to find the error?
      Last edited by RightOn; 02-24-2016, 06:34 AM.

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        #4
        The issue is that when I transpose the Schedule M-2 line 9 figure to Schedule L line 21, the Schedule L balance sheet does not 'balance'.

        Another tax practitioner that I know said if he and the taxpayer together cannot find out the reason, his last resort is to put an offset figure on either "other increases" (Schedule M-2 Line 4) or "other decreases" (Schedule M-2 Line 7) to adjust the bottom line figure on Schedule M-2 line 9 and so it will make Schedule L 'balance' when transposed to there.

        Is this a workable solution?
        Last edited by RightOn; 02-24-2016, 06:39 AM.

        Comment

          #5
          Originally posted by RightOn
          Is this a workable solution?
          You can't be serious!

          The p'ship surely has a set of books, and I assume the books are in balance. The double-entry system of bookkeeping is a "zero-sum" game, so any set of books maintained using it must be in balance. If the books are in balance, then Schedules L and M-2 must also be made to balance. You are simply missing something. Keep looking.
          Roland Slugg
          "I do what I can."

          Comment

            #6
            Whah??

            Originally posted by Roland Slugg View Post
            You can't be serious!

            The p'ship surely has a set of books, and I assume the books are in balance. The double-entry system of bookkeeping is a "zero-sum" game, so any set of books maintained using it must be in balance. If the books are in balance, then Schedules L and M-2 must also be made to balance. You are simply missing something. Keep looking.
            Your clients keep a set of books????
            Circular 230 Disclosure:

            Don't even think about using the information in this message!

            Comment

              #7
              Originally posted by Roland Slugg View Post
              You can't be serious!

              The p'ship surely has a set of books, and I assume the books are in balance.
              Mom and POP business. No books. I feel like I am fighting an uphill battle here.

              Comment

                #8
                If they act like a hobby and not like a business....

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