swaitsandClaude Opus 5.5
0495726001
Split kernel::entry_flows into entry_movements and flows_of so the reversal-mirror proof fits CI; prove runs the fast harnesses, prove-slow the 8 slow ones (own job in scheduled CI), prove-all both. Laws in verification.md renumbered 1-31 with a table of all 55 harnesses. MCP docs checked against the 115 tools (about 60 fixes) with a test that every tool is documented; rules.md cross-references fixed; bookspec statuses and loader tightened; viewer notes wrap and accounts sort by code; STATUS.md says P3 is built, cutover pending. Co-Authored-By: Claude Opus 5.5 <noreply@anthropic.com> Claude-Session: https://claude.ai/code/session_01T3gXMVt7XJPi6ens1or9Dj
3.9 KiB
Partners' capital accounts: what a member's money and property count as
Governs what a member's party totals count (rules.md B-35): a member's capital account rises by the money and the property (net of liabilities on it) the member contributes, and falls by the money and property distributed to them; a partnership liability the member pays for it is money the member contributed. The K-1's capital account analysis (Item L) reports the same contributions and distributions. wanderbooks counts these from the books as they are; the tax-basis figures stay with the CPA.
Treas. Reg. §1.704-1(b)(2)(iv)(b): basic rules of capital accounts
Source: https://www.ecfr.gov/api/renderer/v1/content/enhanced/current/title-26?part=1§ion=1.704-1
Retrieved: 2026-10-20
SHA-256 of the retrieved file (ecfr17041.html): 0eafa6f27d7df3a3cc93ebad7cbdc0c37a49b055c53a43d5e5e8efa29f80beeb
(b) Basic rules. Except as otherwise provided in this paragraph (b)(2)(iv), the partners' capital accounts will be considered to be determined and maintained in accordance with the rules of this paragraph (b)(2)(iv) if, and only if, each partner's capital account is increased by
(1) the amount of money contributed by him to the partnership,
(2) the fair market value of property contributed by him to the partnership (net of liabilities that the partnership is considered to assume or take subject to), and
(3) allocations to him of partnership income and gain (or items thereof), including income and gain exempt from tax and income and gain described in paragraph (b)(2)(iv)(g) of this section, but excluding income and gain described in paragraph (b)(4)(i) of this section; and is decreased by
(4) the amount of money distributed to him by the partnership,
(5) the fair market value of property distributed to him by the partnership (net of liabilities that such partner is considered to assume or take subject to),
Treas. Reg. §1.704-1(b)(2)(iv)(c): treatment of liabilities
Source: as above (the same retrieved file).
(c) Treatment of liabilities. For purposes of this paragraph (b)(2)(iv),
(1) money contributed by a partner to a partnership includes the amount of any partnership liabilities that are assumed by such partner (other than liabilities described in paragraph (b)(2)(iv)(b)(5) of this section that are assumed by a distributee partner) but does not include increases in such partner's share of partnership liabilities (see section 752(a)), and
(2) money distributed to a partner by a partnership includes the amount of such partner's individual liabilities that are assumed by the partnership (other than liabilities described in paragraph (b)(2)(iv)(b)(2) of this section that are assumed by the partnership) but does not include decreases in such partner's share of partnership liabilities (see section 752(b)).
Partner's Instructions for Schedule K-1 (Form 1065), Item L
Source: https://www.irs.gov/instructions/i1065sk1
Retrieved: 2026-10-20
SHA-256 of the retrieved file (i1065sk1.html): 87d46c0e6c07eb0b642e9479f72aed7c35ed005cab0b1c644af5572a9df22d7c
(This page's HTML differs from fetch to fetch, so each retrieval has its
own hash: irs-partnerships.md quotes another retrieval of the same day. A re-fetch on
2026-10-21 hashed differently again; the quoted text was checked present.)
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.