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