# Partnerships: shares of income and capital accounts
Governs `CloseTo::Members` and the members' equity statement. Partners' shares come from the partnership agreement (IRC §704(a)); Form 1065 reports each partner's capital account (Schedule K-1 item L) and the changes in them (Schedule M-2). No authority prescribes how to round a share to the cent: that rule is Stephen's decision (largest remainder, 2026-10-13).

## 26 U.S.C. §704(a)-(b)
Source: <https://www.law.cornell.edu/uscode/text/26/704>  
Retrieved: 2026-10-13  
SHA-256 of the retrieved file (`usc704.txt`): `e596d36039cb451fe9c5bef5eb6b4c36d2451ab83b06e642a8bf44f3697cf3ee`

> A partner’s distributive share of income, gain, loss, deduction, or credit shall, except as otherwise provided in this chapter, be determined by the partnership agreement.

## Instructions for Form 1065 (2025)
Source: <https://www.irs.gov/instructions/i1065>  
Retrieved: 2026-10-13  
SHA-256 of the retrieved file (`i1065.txt`): `364ec05f6a688447def50169604ec0aa976edb2532b110e2736759213a02da78`

**Allocating among partners**

> Allocate shares of income, gain, loss, deduction, or credit among the partners according to the partnership agreement for sharing income or loss generally.

**Schedule M-2**

> Show what caused changes during the tax year in the partners’ tax-basis capital accounts.

**Rounding on the return (not in the books)**

> The partnership may enter decimal points and cents when preparing its return. However, it should round off cents to whole dollars on its return, forms, and schedules to make completing its return easier. The partnership must either round off all amounts on the return to whole dollars, or use cents for all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $8.40 rounds to $8 and $8.50 rounds to $9. If two or more amounts are added to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.