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- California Tax Basis Capital Accounts on Schedules M-2 and K-1 (Forms 565/568)
California Tax Basis Capital Accounts on Schedules M-2 and K-1 (Forms 565/568)
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OldCPA
Level 3
02-08-2022
05:12 PM
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Anyone notice that California now also requires tax basis on their balance sheet, m-2 & K-1s? If you don't check the box on screen 25 to have Federal & California Schedule M-2 the same then the balance sheet & M-2 are out of balance, much less the K-1s not agreeing in total.
Spidell has a long thread on this, with questions from preparers but Spidell, so far as of 3 pm 2/8/22 have not answered any of the questions.
Apparently the FTB instructions say: K– Beginning in taxable year 2021, all LLCs must report members’ capital accounts using the tax basis method on California Schedule K-1 (568). Current year net income/loss and other increases/decreases are now separately reported in columns (c) and (d), respectively.
So are preparers going to be rebuilt this information if there are many years involved with differences depreciation, gain loss on equipment sales, section 754 step up, other items that affect basis? Or do we start with the current year? Is the CA balance sheet & M-2 going to be different than Federal 1065?
Thoughts?
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