sfbcpa wrote:For example, S Corp partner shows "investment in partnership" as $30,000 as other asset on the balance sheet.
K-1 capital account on the Form 1065 should match this correct?
As Harry alludes to, there's more facts we need to know to give you a detailed answer.
As some background as to why we're asking, you could search "704(b) basis", but I'll give a little background here.
Many partnership's must track three different kinds of capital: Tax, Book (or GAAP), and 704(b).
Most of us are familiar with Tax. If the original partners all contributed cash, this basis usually represents the economics of the partners' agreement and works just fine. However...
If the tax return is on a cash basis and they need full accrual GAAP financials, the capital accounts on their financial statements will not be reflective of their tax basis. This requires that you track their tax basis independently of what is probably on their books and reconcile it with each tax return.
Finally, if you have a situation where a partner has contributed property that has a lower tax basis than its FMV, you will likely need to track capital on a 704(b) basis and reconcile this basis to Tax with each tax return. This reconciliation will highlight the existence of any 704(c) items. I'll let you do some reading on 704(c) to let you evaluate if it applies and give you some background on what we need to give you a good answer.
Hope that helps...