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Related to loss from partnership firm

21 August 2021

If there is loss from partnership firm then whether we can transfer it to capital account of partners if yes then how loss will be carried forward by firm in tax return, and if not then loss from partnership firm will be shown in balance sheet

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3 Replies

CA Raj Doshi (Practising CA) (8723 Points)
Replied 21 August 2021

Loss or Profit, both are transferred to partners capital account. It is a presentation thing.The tax computation under the head business could begin from the Profit/Loss before as tax as per P/L account. Presentation of Loss in accounts has not linkage to carry forward of Loss in tax return.

Nidhi (Chief Accountant) (3150 Points)
Replied 21 August 2021

Yes, both are separate things .
it's nothing to do with carry forward and set off of loss of firm in future years..
In books of accounts it's transferred to partner's capital account