ProSeries Software Question on the K1 conversion to tax basis.
I kept the previous K1s on GAAP basis. For 2020, I have filled out the Schedule L and Schedule M-1 with GAAP basis information as I have done in the past. If I then go to the K-1 worksheet to adjust the capital account to tax basis, I receive an error on the Schedule L and M-2. ProSeries is also putting book income instead of tax income in Section L of the K1. Is there something in the software to fix this issue or do I have to fill out the Schedule L with tax basis information.
On the "Schedule K-1 Worksheet", there is a line for each Partner to make an adjustment to Tax Basis. However, these adjustments will then throw off the Beginning Schedule L/BalSheet. I guess you can then override the Schedule L.
I doubt ProSeries will have a fix for this anything soon/ever.
I simply changed the PY capital accounts number on Sch L to the amount reported on the 2019 Sch L. That immediately flowed through to everything else and now I am in balance. Someone indicated that Sch M-2 was supposed to be tax basis. I can't figure out how to do that and have things balance out. If anyone has any thoughts on that I'd like to hear them. Otherwise, Sch M-2 will be in agreement with the books. The individual partners capital accounts on the K-1s will be their tax basis.
I determined what Beginning Basis was needed for each Partner on the Partner's Basis Statement to arrive at the Ending Basis I needed. I entered this amount on the Schedule K-1 worksheet in the Basis column on the Beg of year (tax basis) line. But this does not affect the Schedule K-1 Capital.
Go to Schedule M-2 Analysis of Partners' Capital Accounts. On Row 4 put an 'A' in the 'Special Allocation' column (third column - column 1 is description and column 2 is amount) which integrates with the Schedule K-1 Worksheets 'Special Allocations By Amount' column. Enter a description. My total was zero. Go back to Schedule K-1 Worksheets 'Special Allocation By Amount' column and enter the amounts on line 'A' here that you need to make your Schedule K-1 Section L Partners capital account analysis (tax basis capital) equal the amount you need. The number you enter on the Schedule K-1 Worksheet appears on the Schedule K-1 Other increase (decrease) (attach explanation) line.