Schedule M2 Partners Capital Account

[sami]

Working on two partner LLC, which owns a rental property that has mortgage. Each partner contributed cash and took a loan out (under personal name) and created a LLC. My questions is where does the principal amount paid on the mortgage goes on 1065? My schedule L is off by the amount of principal that has been paid off plus depreciation taken. I have deducted the rental expenses, depreciation and interest paid, but my balance sheet is still off. Each year partner's adjusted basis is being reduced.

Maybe I am looking too much into something....?

[Snaggletooth]

The amount shown for liability on Sch L should be the amount of principal remainingat the end of the year after payments have been applied. From what you are telling me, I believe this is the cause of the problem.

[sami]

Assets and mortgage liability everything is being shown on the Balance Sheet, Schedule L including capital account.

[TAXNJ]

Assets and mortgage liability everything is being shown on the Balance Sheet, Schedule L including capital account.

Did you make any book and/or tax adjustments?