P3 review: asset bases and the tax-basis K-1

Schema 13 is as shipped and the asset columns are schema 14 (shipped
migrations pinned by hash); the tax-basis K-1 leaves net income open (only
the return has it) and takes a contributed prepaid plan at its book amount
as its section 723 basis; a disposal of contributed property names its
704(c) gain or loss; aliases compare by meaning; fixture amounts made up.

Co-Authored-By: Claude Opus 5.5 <noreply@anthropic.com>
Claude-Session: https://claude.ai/code/session_01T3gXMVt7XJPi6ens1or9Dj

docs/spec/rules.md

@@ -234,8 +234,8 @@ earnings the same running way, D-38, 2026-10-20)
   analysis "is based on the partnership's books and records" (the Partner's
   Instructions' Basis Limitations section, `sources/irs-partnerships.md`;
   not Item L, which an earlier version of this rule spliced in). The K-1
-  worksheet is the book capital analysis, which the CPA converts for
-  Item L.
+  worksheet carries the book capital analysis, and beside it the tax-basis
+  capital as far as the books know it (B-36).
 - **No authority** says how to round a share to the cent. Largest
   remainder, ties to the member listed first: DECISION (the owner,
   2026-10-13). Closes made before then replay with the last member
@@ -2467,20 +2467,29 @@ book capital reconciles to tax capital:
   gain or loss at contribution, shared within the entry as its book value
   is (B-13). Property contributed with no basis in the books (no
   registered asset linked to the entry holds a contribution basis for it)
-  is open.
-- What the books can't know is never guessed: the tax depreciation of
-  every fixed asset in service (MACRS, and for contributed property the
-  §704(c) method's allocation: the CPA's, B-15), the tax gain on a
-  disposal, the adjusted tax basis of property distributed, the tax
-  treatment of a change in book capital the books can't explain, and
-  last year's tax ending when an earlier year left a figure open. Each
-  such line is left blank and marked open, with what the books know so
-  far and the book amount the CPA's figure replaces. The book
-  depreciation the tax figure replaces is the period's depreciation
-  expense, the P&L's: each asset's runs and what its disposal entry posts
-  to its expense account (B-15 rule 8; before the seam review the runs
-  alone, so a disposal that credited back part of a month's run stated
-  more than the P&L).
+  is open. Property contributed to a prepaid account (the balance
+  account of a prepaid-expense schedule: a service contract the member
+  handed over, B-13) with no fixed asset for it enters at its book
+  amount, with a note: a contract's carryover basis is what the books
+  recorded for it (DECISION, P3 review 2026-10-21; the CPA to confirm).
+- What the books can't know is never guessed. The share of net income
+  "as figured for tax purposes" is the return's, always: the books are
+  kept on their own basis, and every book-tax difference (Schedule M-1)
+  is the CPA's; so is the ending, and the beginning of any year after
+  the first (Item L: "the partner's ending capital account as
+  determined for last year"). The line names the differences the books
+  do see: the tax depreciation of every fixed asset in service (MACRS,
+  and for contributed property the §704(c) method's allocation: the
+  CPA's, B-15), and the tax gain on a disposal, with a contributed
+  property's built-in gain or loss at contribution, which that gain must
+  take account of (IRC §704(c)(1)(A)). Also open: the adjusted tax basis
+  of property distributed, and the tax treatment of a change in book
+  capital the books can't explain. Each such line is left blank and
+  marked open, with what the books know so far and the book amount the
+  CPA's figure replaces.
+  The book depreciation the tax figure replaces is the period's
+  depreciation expense, the P&L's: each asset's runs and what its
+  disposal entry posts to its expense account (B-15 rule 8).
 - The reconciliation: book ending less tax ending (as far as the books
   know it) = beginning (book less tax) + the built-in gain or loss share
   + property without a basis (at book) − property distributed (at book),

docs/spec/sources/irs-partnerships.md

@@ -61,7 +61,7 @@ Source: <https://www.irs.gov/instructions/i1065sk1>
 Retrieved: 2026-10-20  
 SHA-256 of the retrieved file (`i1065sk1.html`): `d7d6298286601fd95ab8e445c10fd62499ea1e37f8e5c3531f8e1783862d8d03`
 
-**Item L, its first paragraph** (the partner's capital account, on the tax basis; the K-1 worksheet carries the book capital account, which the CPA converts)
+**Item L, its first paragraph** (the partner's capital account, on the tax basis; the K-1 worksheet carries the book capital account and, beside it, the tax-basis one as far as the books know it, rules.md B-36)
 
 > The partnership must report your beginning capital account and ending capital account for the year using the tax-basis method, including the amount of capital you contributed to the partnership during the year, your share of the partnership’s current-year net income or loss as computed for tax purposes, any withdrawals and distributions made to you by the partnership, and any other increases or decreases to your capital account determined in a manner generally consistent with figuring the partner’s adjusted tax basis in its partnership interest (without regard to partnership liabilities), taking into account the rules and principles of sections 705, 722, 733, and 742. See the Instructions for Form 1065 for more details.