Partners' capital accounts should be determined using the same method on Form 1065 Schedule L,Form 1065 Schedule M-2,and the Schedules K-1 prepared for the partners.

Question

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The capital accounts on Form 1065 Schedule L, Schedule M-2, and Schedules K-1 can be reported using different methods, such as tax basis, GAAP, or Section 704(b) book basis, depending on the partnership's accounting policies and the requirements of each form.

Partners' Capital Accounts Should Be Determined Using the Same Method