Partners' capital accounts are accounts that show the partners' equity in the partnership. The partners' capital accounts include the following items:

• contributions made to the partnership by the partners, either in the form of cash or property, increase the capital accounts
• guaranteed payments by the partnership to the partners increase the capital accounts
• profits or losses by the partnership, which are allocated based on the partnership agreement, increase the capital accounts (for profit) or decrease the capital accounts (for losses)
• distributions from the partnership to the partners decrease the capital accounts

Partners' capital accounts are tracked on an accumulated basis. Each year you should begin with the beginning of year capital account amount and then add or subtract the appropriate transactions noted above. You then will reach the end of year capital account amount.

It is the solely the responsibility of each partner to continually track their basis in the partnership and not the responsibility of the partnership but the capital accounts may be accounted for on a partnership wide basis (one capital account) or may be accounted for on a partner by partner basis. The partner by partner basis is generally easier to use over the long-term because it allows the partnership to more easily account for special allocations, partnership liquidation, and partner ownership changes.

To review or modify entries made in the TaxAct program relating to partner capital accounts, follow these steps:

1. From within your TaxAct return (Online or Desktop), click K-1 Wizard. On smaller devices, click the menu icon in the upper left-hand corner, then select K-1 Wizard.
2. Click Continue to reach the screen Federal K-1 Wizard - Partner Summary
3. Click +Add Schedule K-1 to create a Schedule K-1 for a partner not yet listed, or Review to review a Schedule K-1 already created
4. Select Quick Entry or Step-by-Step Guidance
1. If you select Quick Entry, be sure to scroll down through all sections of the form.  Close the Quick Entry window when done.
2. If you select Step-by-Step Guidance, the program will proceed with the interview questions for you to enter or review the appropriate information.