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, 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:

1. From within your TaxAct return (Online or Desktop), click K-1 Wizard, then click Continue. On smaller devices, click in the upper left-hand corner, then click K-1 Wizard.
2. Click + Add Schedule K-1to create a new copy of the form or click Edit to review a form already created.
3. Click Quick Entry to scroll down to answer all applicable questions or click Step-by-Step Guidance to proceed with the program interview questions.