Correcting Capital Account Mistakes and Errors on Partnership Returns

A Comprehensive Guide to Corrections, Allocations and "True-Ups" of Capital Accounts

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

Conducted on Wednesday, May 22, 2019

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide tax professionals and advisers with an in-depth and practical guide to the accounting and tax disclosure requirements to correct and adjust capital account balances. The panel will focus on the mechanics of both book entries and tax reporting and will offer concrete examples of corrective entries and form reporting as illustrations. The webinar will also cover the interpretation of partnership agreements and provide guidance on how to apply partnership provisions to corrective entries and tax disclosures.


Maintenance of capital accounts is one of the more challenging tasks for tax professionals advising partnerships. Due to inexperience, changes in advisers, and errors and omissions, capital accounts are often not maintained accurately. Absent corrections and adjustments, such items can lead to misallocation, phantom income, and basis errors.

Even more frustrating is that in many cases the corrective adjustments to bring the accounts back into balance are not always clear. Moreover, these issues will become even more challenging with the advent of the new partnership audit rules.

Partnership accounting is by its very nature complicated and some transactions and events will cause difficulties in maintaining capital accounts. Provisions such as allocations of nonrecourse liabilities, minimum gain chargebacks, and multistate filings are areas that can create problems for tax professionals. Advisers must be able to identify and correct capital account discrepancies from both compliance and reporting standpoints.

Listen as our experienced panel provides an overview of common—and not so common—capital account errors and scenarios that need corrective measures, and will outline the book and tax reporting adjustments to remedy the situations.



  1. Partnership agreement interpretation
  2. Identifying capital account misstatements
  3. Book entries
  4. Tax reporting and disclosures
  5. Interaction with new partnership audit rules
  6. Case study with illustrations


The panel will discuss these and other critical issues:

  • Identifying errors, miscalculations or misstatements in capital accounts
  • Correcting mistakes in mandatory adjustments
  • Basis and capital account corrections where a valid Section 754 election was in place
  • Book vs. tax-corrective adjustments
  • Prior year adjustments
  • Impact of new partnership audit rules


Mandarino, Joseph
Joseph C. Mandarino

Smith Gambrell & Russell

Mr. Mandarino's practice focuses on corporate, tax and finance law. He is involved with a wide variety of...  |  Read More

Tannenbaum, Faye
Faye Tannenbaum, CPA

Mazars USA

Ms. Tannenbaum has over 28 years of experience providing tax compliance and consulting services to some of the largest...  |  Read More

Other Formats
— Anytime, Anywhere

CPE On-Demand

See NASBA details.

CPE Available



CPE Not Available