Client has GAAP books and previously reported GAAP basis capital accounts on K-1. Entering tax basis adjustment on K-1 worksheets results in Schedule L no longer matching books. But, 1065 instructions clearly state that Schedule L must match books & records.
Clearly, K-1 capital accounts and Schedule L should not be linked. Will ProSeries fix this before the filing deadline?
M-2 still shows Net income per books. I don't think the GAAP books vs. Tax Capital for tax return requirement has been answered. We are adjusting the Schedule L to tax basis at beginning of the year and yet it still adds Book income for 2020. Still searching for an answer.
Assuming Schedule L is entered on a GAAP basis, adjusting Line 21 of Schedule L to reflect a GAAP basis capital account figure will also force the Beginning and Ending capital account numbers on the M-2 to be reported on a GAAP basis in the program. The Form 1065 instructions for the Schedule M-2 clearly indicate that the beginning and ending M-2 balances are supposed to agree with the capital accounts reported on the Schedules K-1 (tax basis). They don't. Do we need a "check box" to pull the numbers from the Schedule K-1 Worksheet totals and the net income (tax basis) from above on the M-1? At the same time, Item L on the Partner K-1s are pulling GAAP net income ???
As an even better suggestion for those of us who will continue to use GAAP for Schedule L going forward, an enhanced M-2 Worksheet that rolls forward the partners' capital accounts in two columns (one GAAP basis and one tax basis) might be helpful.
The M-1 and M-3 were sufficient. Very few accounting packages allow for tax basis bookkeeping. If they do, they also have cost basis, fair value basis, foreign currency conversion, etc. and cost a lot.
I'm going to have the same problem but planning on extensions for most of the partnerships.
The IRS penalty waiver (recently issued) appears to cover only adjustments to beginning balances and apparently not the 2020 activity. Hence, I would agree a fix needs to be done in relatively short order.
Is overriding the M-1 beginning number and income number the only solution that has been found for this so far?
I am on the phone with Proseries right now and they don't seem to have any solution for me. Lacerte already has a fix, we need one too. https://proconnect.intuit.com/community/balance-sheet/help/tax-basis-capital-account-reporting/00/12...
While an override may work, that is not a long term solution when all partnership K-1s are supposed to be on a tax basis going forward.
Are there still override issues? If so, how is that possible on May 3rd. Like a dope, I marked someone as GAAP basis last year, when I should have marked it tax basis. All my other partnership clients were tax basis as well, so this is the first one I've come across with this
I wish I was the one who got to make that call at my firm... I'm going to be working on it though because there is way too much wrong with this software. My previous firms have all used CCH and they are so quick to fix any issues like this!
And it's crazy that they don't monitor this site because when you call for help, they send you here!
I am a one CPA operation. My wife is my office manager and the only other employee. I have used Pro Series since 2006 (which is the year I started doing this full time, did it on the side for 7 years before that). I have wanted to get rid of Pro Series the last 3-4 years. Especially in 2018. I probably should more seriously consider it. Part of it is, I have never used any other professional software. While I graduated in 1991, I never worked in tax for other companies, so not familiar with other software.
Almost 10 months after this was originally posted - they finally have a fix! 🙄
Good luck to those of you still using ProSeries - I am not going to miss it!! 😂