Capital Account Reporting

Starting in taxable year 2022, and all subsequent years, partnerships and limited liability companies taxed as partnerships will be required to report partners’ and members’ capital account information using the “tax basis method” described in the 2022 Instructions of IRS Form 1065, but calculated under California law, on their Schedule K-1 (565) and Schedule K-1 (568).

For taxable years 2021, 2022, and subsequent tax years, Franchise Tax Board has issued Notice 2023-01 which allows partnerships and limited liability companies taxed as partnerships to report their partners’ or members’ capital account information using the “tax basis method” as determined under either federal or California law.

Questions may be emailed to FTBAdvocate@ftb.ca.gov.