So then how would I account for reducing the tax attributes?

If the tax attributes are supposed to be reduced on the corporate level, then the K1 should not show the loss.  Is that correct?  I have a client with $680,000 of debt discharged and a current year loss of $150,000. Also, the carryforward loss on their personal is $130,000.

Based on the rules for reducing tax attributes, I don't think they should be able to use those losses.