How to specially allocate capital accounts in ProConnect Tax

This article will walk you through entering partners' capital accounts to flow to the Schedule K-1, item L. By default, ProConnect Tax will allocate the capital amounts based on each partner's profit sharing percentage. Below, you'll also find the steps to specially allocate the amounts to particular partners.

First, enter capital totals for all partners (required):

1. Go to Input Return ⮕ Balance Sheet, M-1, M-2 ⮕ Schedule M-2 (Capital Account).
2. Enter the total Beginning capital for all partners, if the amount didn’t roll over from last year’s return. 
3. In the Contributed Capital subsection, enter the:
   • cash,
   • property, and
   • other increases. Make sure to enter a description for any other increases so you can specially allocate them later.
4. In the Distributions subsection, enter the:
   • cash,
   • property, and
   • other decreases. Make sure to enter a description for any other decreases so you can specially allocate them later.

To specially allocate the capital amounts:

1. Go to Input Return.
2. Select the Special Allocations tab.
3. In the Amounts to Allocate list, select Capital Account (Sch. K-1, Item L).
4. Choose the amount you'd like to allocate first, such as Beginning Capital.
5. Allocate the amount to each partner by dollar amount or by percentage.

To quickly verify you've entered the amounts correctly, go to the Check Return tab and click on US. Select Capital Account Reconciliation.