I am a tax preparer using ProSeries. Clients often maintain their own Quickbooks Online and provide me their final annual Balance Sheet and Profit & Loss statements to use in creating the tax return for their small businesses. There are no 'off-book' items to consider, just these reports from their accounting software, which I do not have access to. I just created a 1065 for a dual member LLC, each received a K-1 which allocated income and expenses based on their ownership percentages of 51% to Partner A and 49% to Partner B.
Client is asking if they need to make journal entries to adjust their books for info from their respective K-1's so that their individual Equity Accounts on their Balance Sheet are adjusted for the allocation of non-deductible expenses (shown on K-1, line 18, code C) of Partner A=$155 and Partner B=$149.
Do they need to make these entries in QBO and if so, what is the entry?
If the expenses are already booked and inside Net Income, which rolls to Equity, what is the entry to then? I've not had a client ask me this before.
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