California FTB Issues Bulletin on Capital Account Reporting for Partnerships, LLCs Taxed as Partnerships

The California Franchise Tax Board March 10 issued a public service bulletin on capital account reporting for individual income tax purposes. Beginning taxable year 2022, partnerships and limited liability companies taxed as partnerships must report partners’ and members’ capital account information using the tax basis method described in 2021 instructions of Internal Revenue Service Form 1065, but calculated under California law on Schedules K-1 (565) and K-1 (568). For taxable year 2021, entities may report the information using the tax basis method determined under either federal or California law. The option to use the federal amount is limited solely to ...