Partnerships and Estimated Tax Payments

[mmmconsultingservices]

I think I know the answer but wanted to see if I am wrong here. First, I have a partnership and we record tax payments estimates as a debit to Equity (Tax Estimates) / Credit Cash. Is this actually considered an Owner Distribution? I was reading and it said that Tax Payments aren’t included in the calculation for Partner Capital M2 but then my balance sheet doesn’t balance in Schedule L. 

[sjrcpa]

Are these state PTET payments?

State nonresident withholding payments?

Federal estimated tax payments for the Partners?

[mmmconsultingservices]

I suppose that would help! They are Federal Estimated Payments for the Partners

[mmmconsultingservices]

What is also causing an issue is that my Schedule L capital is different than the M2 because of book to tax differences in depreciation (because Net Income is tax basis) and those payments. 

[sjrcpa · Accepted solution]

Those estimated tax payments are distributions/draws.

[mmmconsultingservices]

Do you also know if I should add the difference between the depreciation book to tax as part of an adjustment on the M2? Or just leave M2 and Schedule L capital balance different?

[sjrcpa]

Nowadays we have different capital accounts on the 1065 balance sheet than on the K-1s. Book basis vs Tax basis.

[mmmconsultingservices]

Ok it’s just weird that the tax system ProConnet doesn’t automatically add that to the adjustment. But I get it. At least I got from your answer is the tax payments are indeed distributions.