Why is the capital account balance on my K-1 different from the amount I invested?

Your capital account balance may differ from the total funds you originally contributed due to specific IRS reporting rules. The IRS requires K-1 capital accounts to be reported on a "Tax Basis" method.

This means the capital account strictly tracks your ongoing investment activity from a tax accounting perspective (Original Contributions + Allocated Income - Allocated Losses - Distributions). Over the life of the SPV, any income or loss allocated to you, or any distributions made, will change your ending balance. It does not reflect the current Fair Market Value (FMV) of your investment.

This is completely normal for partnership tax accounting and does not negatively impact the actual value of your investment, your economic rights, or your ownership percentage in the SPV.