A 1065 client purchased an interest in an LLC in 2020 for $50,000 from an exiting member. On my client's K-1 there is no capital contribution because it went to the exiting member so that is our outside basis adjustment. But the exiting member had a negative capital account to the tune of $150,000 which was transferred to my client. The activity reported a net loss of $100,000 for 2020, so now my client has a capital account of (250,000) and outside basis adjustment of 50,000.
How is this 150,000 difference accounted for on my client's tax return and books?
I did a search but only found discussions relating to how to book the sale on the LLC tax return and books. I'm sure this is pretty basic and discussed somewhere I just can't seem to find it today.