How to specially allocate capital accounts in ProConnect

This article will walk you through entering partners' capital accounts to flow to the Schedule K-1, item L. By default, ProConnect will allocate the capital amounts based on each partner's profit sharing percentage. Below, you'll also find the steps to specially allocate the amounts to particular partners.

First, enter capital totals for all partners (required):

1. Go to the Input Return tab.
2. On the left-side menu, click on Balance Sheet, M-1, M-2.
3. Select Schedule M-2 (Capital Account).
4. Enter the total Beginning capital for all partners, if the amount didn’t roll over from last year’s return. 
5. In the Contributed Capital subsection, enter the:
   • cash,
   • property, and
   • other increases. Make sure to enter a description for any other increases so you can specially allocate them later.
6. In the Distributions subsection, enter the:
   • cash,
   • property, and
   • other decreases. Make sure to enter a description for any other decreases so you can specially allocate them later.

To specially allocate the capital amounts:

1. Click on the Special Allocations tab at the top of your screen.
2. In the Amounts to Allocate list, select Capital Account (Sch. K-1, Item L).
3. Choose the amount you'd like to allocate first, such as Beginning Capital.
4. Allocate the amount to each partner by dollar amount or by percentage.

To quickly verify you've entered the amounts correctly, go to the Check Return tab and click on US. Select Capital Account Reconciliation.

Related Topics:

• How to use special allocations in ProConnect Tax for Form 1065
• Entering Section 754, 743(b), and other specially allocated depreciation in ProConnect Tax
• How to zero out partner capital accounts in a final year
• Entering and allocating partners’ guaranteed payments in ProConnect Tax