taxpayer's final K-1 has negative ending capital

[hgtc]

Taxpayer received final K-1 (limited partner) that have negative ending capital balance.  Taxpayer did receive $119 distribution during the year.  But, Partnership was sold and he did not receive any residual from the buyer.

1. do I report $119 as capital gain distribution?  If yes, where to input this?

2. do we need to report ~$3k negative capital as gain?

[PhoebeRoberts]

You just run everything through the usual basis calculations. Your guy likely has distributions in excess of basis and/or losses suspended for lack of basis.

Capital account is not necessarily indicative of basis.

[hgtc]

So, we need to report $119 excess distribution through long-term capital gain in Sch D?

[PhoebeRoberts · Accepted solution]

Distributions in excess of basis do go on Schedule D, yes.

[hgtc]

thanks.

[dude7707]

Is it true also, if the final year of Ptrnshp, Partner's Neg capital balance can be reported on his or her's Sch D as LTCL? 

[abctax55]

@dude7707 

I think you have that going the wrong way.  A negative capital basis would not be a loss.