Question

Why doesn't Schedule M-2 line 1 (beginning partner capital) match what I entered on the balance sheet?

Forum|Forum|2 years ago
February 4, 2024
1 reply
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When I print out my return for review, my schedule M-2 "Analysis of Partner's Capital Accounts" shows a beginning balance that is about 10% higher than the number that I entered in the "Liabilities and Partner Capital" section of the balance sheet.

How is this being calculated?

I'm pretty sure I need the beginning balance to match what I used for the ending balance on my previous tax return.

TurboTax Business Windows

F

fxfAuthor

Here's some more info:

When I view the Schedule K-1 Worksheets, I can see that one of my partner's "Beginning Capital Account" in section L is not correct -- it is too high. I have only two partners in the LLC, and the first partner's "Beginning Captial Account" is correct.

Any ideas where I would look to verify each member's beginning capital account?

PatriciaV

The Partners' Capital beginning balances can be reviewed under Partner/Member information in the Business Info section of the step-by-step process. Using this path for input assures that the info is carried over to all related areas of the return.

These numbers are generally carried over from the prior year return if you used TurboTax Business last year. But you can manually update the numbers presented in this section.

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F

fxfAuthor

I've gone through everything with a fine-toothed comb, and I think I understand what happened.

I started using TurboTax Business in 2022. I think I may have mis-typed the beginning capital account balance for one of my partners in that year. The incorrect balances were printed on the partner's K-1, and she did not catch this. Nor did I. (Nor did Turbotax -- I believe the member's capital accounts should reconcile to the partnership's capital accounts, but they were out-of-balance on the tax return last year.)

When I started TurboTax Business 2023, the partner's balance was picked up from the previous return.

I do not see where I can correct the member's capital account opening balance. If I go to Business Info -> Partner Info, there is a screen for "Member Capital" but I can only input current year capital contributions/withdrawals. I can not change the opening balance. At least not in the "Step by step" interview.