The sale was outside the partnership so does not get reported by the partnership nor on K-1s.
However, you may like to footnote the transaction on B's K-1. B's ending capital account should be zero and his K-1 gets marked Final.
C's capital account will increase by the amount of B's ending capital account immediately before the transaction. C's outside basis is what he paid B for the partnership interest.
May I add a related question, please? I have a situation where Partner A purchased the interests of a few other partners. I see where screen 29 can be used to transfer the outgoing partners' Capital Accounts to Partner A. However, I know I need to increase Partner A's outside basis by the amount he paid for the other partners' interests. I don't see anyplace in Screen 9.2 that allows for this type of increase to outside basis. Is here some other place to adjust the outside basis?
Please note that @hrrisoncpa has also asked this as their own topic, here:
No need to keep asking, and is being answered on that topic.
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