I have a new client that received a small K-1 from a partnership he invested in that was also a final-year K-1. From what it looks like, the partners capital section on the K-1 is on tax basis.
The K-1 beginning capital amount was negative $1,400. My client was allocated $2,075 of income and had $2,185 of distributions, which left his K-1 ending partner capital account negative $1,510. Strangely, the other partners ending K-1's are postive and combine to net the ending capital accounts to -0-.
It appears we have $110 of distributions in excess. I'm also not sure what to do about the negative capital amount, especially since it nets to -0- with the other partners positive K-1 ending capital amounts. Do we have a capital loss? Do you ignore it due to the small amount? I've never seen this before.
Any input would helpful!