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2 Answers

Schedule K-1; Method of Accounting?

Asked by: lpliskin 899 views YA Discussion

Can someone please clearly explain (line L) at the bottom? Choices are
Tax Basis
GAAP
Section 704(b) book
Other

Example:
Partner A contributed 13,000 cash and a vehicle valued at 2,402.00.

Partner B contributed 3,047.00 cash.

Profits and losses are 50% each.
Capital:
80.22% partner A
19.78% for partner B

I don’t know which box to check.
Thank you
Thanks Bobby, however, the instructions do not explain these things.

How others found here:

  • 704 b basis calculation
  • tax capital account tax basis
  • tax basis gaap or 704(b)

2 Answers



  1. Bobbie on Mar 28, 2012 Reply

    Instruction for the K-1 are available at the http://www.irs.gov website using the search box for this purpose.

    http://www.irs.gov/newsroom/article/0,,id=168177,00.html

    The Internal Revenue Service today provided tips to businesses, individuals and tax professionals to avoid errors involving Schedules K-1.

    Income, deductions and credits from partnerships, S corporations, estates and trusts are reported to investors on Schedules K-1. Correct information on the forms by issuers and reporting of the income by recipients is important because the IRS matches the data to other tax returns to ensure accurate reporting.

    A recent study found that many unnecessary notices issued to taxpayers could have been avoided if Schedule K-1 entity information was accurate when the forms were filed and if offsets against income reported on Schedule K-1 were reported correctly.

    Businesses, individuals and return preparers can avoid unnecessary questions and correspondence by following these instructions:
    To reduce errors, the IRS also encourages electronic filing of Schedules K-1 and other tax forms.

    Related Items:

    Form 1041, Schedule K-1, Beneficiary’s Share of Income, Deductions, Credits, etc.
    Form 1041, Schedule K-1 Instructions
    Form 1065, Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc.
    Form 1065, Schedule K-1 Instructions
    Form 1120S, Schedule K-1, Shareholder’s Share of Income, Deduction, Credits, etc.
    Form 1120S, Schedule K-1 Instructions
    Form 1040, Schedule E, Supplemental Income and Loss
    The Electronic IRS
    IRS e-file
    Hope that you find the above enclosed information useful. 03/28/2012

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  2. tro on Mar 28, 2012 Reply

    the K(1) will report the partner’s share of profit or loss, flow thru items that are listed on the form

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