Recording K-1 activity in partnership
I have a bookkeeping client that is a partnership. This partnership A owns 50% of another partnership B. They (B) issued the K-1. I have not had lot of these but in the past, I record the K-1 activity (income items and the distributions are usually are there) and my investment account on the partnership A book will match the K-1 ending capital account from B. I am new to this account but that is exactly what the prior accountant did also for the prior years. It worked in the prior years.
This year is it off. I asked the CPA that prepared the return. He said he thinks it is a book to tax depreciation difference, or atleast most of it is. I am not sure how to record that to make my investment account match the ending capital account on B's K-1. How do you book the extra $12,000? Should it be an other expense and take it this year or do I book a balance sheet account because I assume I will keep seeing this and eventually it would zero out (assuming new assets were not purchased) once book matched tax.