2020 K-1 negative account basis in Part II, section L & N

[Wolakota]

On the 2019 K-1, my client showed a final capital account of $843,443.  The the new rules changed, so the beginning capital account on his 2020 K-1 showed ($47,249).  This was the year he had his final distribution of $843,443 - the same as his ending capital account on the '19 K-1.

I'm baffled.  The ending capital account on the 2020 K-1 reflects this distribution and shows a final  capital account of ($890,688).  Box N on this 2020 K-1 report the beginning share of net unrecognized section 704(c) gain of $871,991 and an ending gain as simply and empty line _________.

Last year he had a distribution of $314,700.  He started his capital account that year at $446,963, added $711,180, minused out the $314,700 distribution and arrived at $843,443 ending capital account..

If I go with the new capital account of ($890,668), I assume I have to report this as a positive gain on Schedule D with a $0 basis.  Or, if I use the unrecognized gain, I'd report $871,991 as the gain.  But, if I resort to the final capital account basis pulled in from 2019, I'd have no gain. 

I did some research, even read one of the answers from an earlier question on negative basis.  But I just can't find anything definitive on how to respond the the new capital account reporting for partnerships.

Any links to a definitive answer, or an answer from a colleague here will be very much appreciated.

Michael Rudy, EA, CFP

[PhoebeRoberts]

Setting aside the K-1 presentation, what's the answer you get when you work through his outside basis schedule from the inception of the partnership? Sounds like the K-1 used to be presented on either GAAP or 704(b) book basis, and you can't really use those to arrive at the right tax answer.

[Wolakota]

Thank you, Ms. Roberts.  I will see if I can have my client track this down.  (Truth be told, I don't do corporate or partnership work - just individual taxes, so this is an education.  Thank you for your help as I work my way through the questions you raised).