The following diagnostic is generating:PER THE FORM 1065 INSTRUCTIONS, SCHEDULE M-2, LINE 3, AND THE TOTAL OF SCHEDULES K-1, ITEM L "CURRENT YEAR NET INCOME (LOSS)" MUST TIE OUT TO FORM 1065, PAGE 5, ANALYSIS OF NET INCOME (LOSS) PER RETURN, LINE 1. ANY DIFFERENCES TO THAT AMOUNT MUST BE REPORTED AS OTHER INCREASES / OTHER DECREASES ON SCHEDULE M-2, LINES 4 AND 7 AND FLOW TO THE SCHEDULE K-1, ITEM L AS "OTHER INCREASES (DECREASES)." AUTOMATIC ADJUSTMENTS ARE COMPUTED FOR TAX-EXEMPT INTEREST AND OTHER TAX-EXEMPT INCOME, NON-DEDUCTIBLE EXPENSES, GUARANTEED PAYMENTS (OTHER THAN HEALTH INSURANCE), SECTION 743(B) POSITIVE AND NEGATIVE INCOME ADJUSTMENTS, GAIN (LOSS) FROM DISPOSITION OF SECTION 179 ASSETS, RECAPTURE OF SECTION 179 DEDUCTION, AND OIL AND GAS DEPLETION EXPENSE. OVERRIDES WERE ADDED TO THE SCHEDULE M-2 SCREEN FOR THESE ITEMS THAT ONLY AFFECT THE CAPITAL ACCOUNTS. USE SCHEDULE M-2, OTHER INCREASES/DECREASES TO MAKE ADDITIONAL ADJUSTMENTS TO THE PARTNER’S TAX BASIS CAPITAL ACCOUNTS AS NEEDED.
