I withdrew my entire capital account from a partnership - is this considered a "disposal of my interest in the partnership" or is it simply a distribution?

[DanielV01]

It depends.  It could be both.  Money withdrawn from your capital account will be a distribution.  Whether or not it also is a disposal depends if you have "left" the partnership or sold your ownership in the partnership.  In this case, "Final K-1" should be marked to certify that you have disposed of your interest in the partnership.

However, if you are still involved with the partnership, even though your capital account is $0, you have not disposed of your interest.  But you don't have any investment left inside of the partnership (unless the partnership earns money to give you renewed basis in the partnership.