Maintaining Partner Capital Account Balances: Preparing Workpapers, Documenting Allocations and Corrections

A 110-minute CPE webcast with interactive Q&A

Thursday, November 29, 2018

1:00pm-2:50pm EST, 10:00am-11:50am PST

or call 1-800-926-7926

This video webcast will provide tax preparers and compliance professionals serving partnerships and LLCs with a solid and practical foundation to maintaining partners’ capital account balances, including account setup and workpaper preparation. The panel will offer a practical discussion of tax allocation rules and illustrate the application of the rules with mathematical examples, explanations of operating agreement terms, and approaches to compliance.


Maintenance of capital accounts is one of the more challenging elements of partnership tax compliance. Even experienced professionals sometimes struggle with unclear terms in partnership agreements, applying targeted allocations, and ensuring that allocations and corrections are carried forward in documenting the partners’ capital accounts.

Quite often, the capital accounts are not set up correctly, or at all, at the inception of the partnership. Making sure that allocations are properly documented and carried forward, correcting misallocations from prior years, and dealing with complex issues such as non-recourse liabilities and minimum gain chargebacks can present additional difficulties in maintaining accurate capital accounts.

A critical step in capital account balance maintenance is documenting an adviser’s interpretation of the partnership agreement’s allocation provisions. The partnership workpapers should clearly detail any gray areas where the adviser had to apply independent judgment in making a current year allocation, or in adjusting an allocation from prior years. Partnership accounting is by its very nature complicated, and there are a number of transactions and events that often cause difficulties in maintaining capital accounts.

Listen as our experienced panel provides a practical guide to creating and maintaining capital account balances, including tips and tools for creating clear and defensible workpapers to document partnership allocations and corrections.



  1. Setting up capital accounts at the beginning of operations
  2. Importance of tracking section 704(c) allocations
  3. Handling adjustments required by Section 754 elections
  4. Identifying errors in prior year account calculations
  5. Maintaining workpapers and capital account schedules


The panel will review these and other key issues:

  • Key tax allocation principles for capital accounts
  • Impact of “substantial economic effect” requirements in making capital account allocations
  • Documentation that advisers should include with capital account work papers
  • Identifying errors, miscalculations or misstatements in capital accounts
  • Documenting prior year adjustments


Bilsky, Jeffrey
Jeffrey N. Bilsky

Partner, National Tax Office

Mr. Bilsky has more than 20 years’ experience providing tax services to private equity investment funds, capital...  |  Read More

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

Ferguson, Justin
Justin Ferguson
Managing Director
Grant Thornton

Mr. Ferguson is part of the Firm's National Partnership Capital Account Maintenance (PCAM) Group. The PCAM group...  |  Read More

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