Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Reportibg Partners' Basis on a K-1

hrrisoncpa
Level 3

Re. the new requirement to report Tax Basis Capital on K-1's:  Is it the partner's OUTSIDE basis that's required?

0 Cheers

This discussion has been locked. New comments cannot be posted on this discussion anymore. Start a new discussion

1 Solution

Accepted Solutions
sjrcpa
Level 15

Considering potential penalties (although waived for 2020) I think you owe it to yourself and your clients to do your own research. Come here for clarification if you need it.

If you do it wrong, a valid defense is not "someone on the Intuit community said this is how to do it"


Ex-AllStar

View solution in original post

7 Comments 7
sjrcpa
Level 15

No. Tax basis capital account computed with partnership numbers.


Ex-AllStar
hedgeslaw
Level 3

The new partnership basis reporting uses their outside basis. If the partnership has never added or lost partners, then the book value of the capital account (inside basis) and the outside basis (cost basis) will be the same. However, if there have been partners added or lost, the book value of their capital accounts and their outside basis will be different, unless they sold or bought at book value. So under the new reporting, if there have been ownership changes, the outside basis will need to be provided by the partner, as the preparer will not know this amount. JEEZ LOUISE.

The IRS is not going to penalize mis-reporting of basis for 2020 returns. However, next year the penalties are slated to start being assessed.

IF THIS ANSWERS YOUR QUESTION, PLEASE MARK IT ACCEPTED SO OTHER CAN FIND IT QUICKLY. THANKS.

0 Cheers
hrrisoncpa
Level 3

Confusing.  One response says, No, don't use outside basis.  Next response says, Yes, use outside basis.

I agree that if the partnership has never added or lost partners then, in general, the Capital Accounts would be equal to outside basis.  BUT, if there had been purchases and sales (and more likely than not the purchases were NOT at book value) the outside basis would not be equal to the Capital Accounts.

0 Cheers
sjrcpa
Level 15

You are also assuming books and capital account were maintained on tax basis.


Ex-AllStar
sjrcpa
Level 15

@hrrisoncpa Yes it is confusing. Do some research yourself, such as what IRS has decreed, and don't rely on strangers on the internet.


Ex-AllStar
hrrisoncpa
Level 3

I guess I misunderstood the purpose of this forum.  I thought it was to save fellow professionals some time.  Sorry.

0 Cheers
sjrcpa
Level 15

Considering potential penalties (although waived for 2020) I think you owe it to yourself and your clients to do your own research. Come here for clarification if you need it.

If you do it wrong, a valid defense is not "someone on the Intuit community said this is how to do it"


Ex-AllStar