How do I report a final distribution in excess of partner basis from a K-1?

[user17742114459]

My partnership K-1 shows a line 20 ZZ distribution in excess of partner basis of $4,974. This is a private partnership in which I materially participate and is a final distribution.  I need to generate a Schedule D to report the long term capital gain. How do I report this?

[MelindaS1 · Accepted solution]

Start by entering the K-1 income into the return as you typically would each year, follow the prompts until you see this screen - then check one of these 2 boxes for disposal (the top box, for a full disposition): 

The program will guide you from there to enter the necessary details to report the long-term gain on sale / redemption of partnership interest, which will flow to Schedule D.