When you say the K-1 shows positive capital, are you looking at Line J in Part 2 on the first page? It is possible that you could have a negative tax capital account, even though you have an overall positive tax basis in your interest . This could happen, for example, if you were "allocated" a share of the partnership's debt. For example, if you had a negative tax capital account of 20,000 and a share of debt equal to 160,000, you would have a positive tax basis of 140,000. However, upon the disposition of the partnership interest, you would have additional proceeds for tax purposes of 160,000, due to relief of your share of the partnership's debt. That could cause you to have up to 20,000 more gain than the proceeds you actually received. Both your tax capital account and your share of debt should be reflected on the first page of the K-1, Part 2, lines J and L, respectively. If your capital account is not negative, it would be a bit hard to explain the outcome you're describing.
278 weeks ago