![]() ![]() The IRS will require partnerships to use the transactional method in computing partners' capital on the tax basis instead of reporting using other methods, such as GAAP.įorm partnerships that did not report partners' capital accounts using the tax basis method and did not maintain capital accounts under the tax basis method in their books and records may refigure a partner's beginning capital account for 2020 using one of the following four methods discussed below: the tax basis method, the modified outside basis method, the modified previously taxed capital method, or the Section 704(b) method. Partners’ Capital Accounts: New Tax Basis Reporting Requirementsįor tax years beginning in 2020, the IRS is requiring partnerships filing Form 1065 to report partners' capital accounts on the tax basis (which is what the IRS refers to as the transactional method). ![]()
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