Level 3

Reportibg Partners' Basis on a K-1

Forum|Forum|5 years ago
January 22, 2021
2 replies
13 views

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

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sjrcpa

Level 15

No. Tax basis capital account computed with partnership numbers.

The more I know the more I don’t know.

H

hedgeslaw

Level 4

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.

H

hrrisoncpaAuthor

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.

sjrcpa

Level 15

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

The more I know the more I don’t know.

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